# Amicus Curiae Brief — Seminole Tribe of Fla. v. Florida > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0546%3A18 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1996 - **Citation:** 517 U.S. 44 ## Text In the Supreme ¢ oF THe CLERK 1995 OF THE United States OCTOBER TERM, 1994 SEMINOLE TRIBE OF FLORIDA, Petitioner, vs. STATE OF FLORIDA, et al., Respondent. On Writ of Certiorari To the United States Court of Appeals For the Eleventh Circuit ————————— BRIEF OF AMICI CURIAE NATIONAL INDIAN GAMING ASSOCIATION, MINNESOTA INDIAN GAMING ASSOCIATION AND CALIFORNIA-NEVADA INDIAN GAMING ASSOCIATION IN SUPPORT OF PETITIONER; APPENDIX IN SUPPORT eee March 31, 1995 LEVINE & ASSOCIATES JEROME L. LEVINE FRANK R. LAWRENCE 2049 Century Park East, Suite 710 Los Angeles, California 90067 (310) 553-8400 Counsel of Record BLUEDOoG, OLSON & SMALL KurT V. BLUEDOG 5001 W. 80th Street, Suite 670 Minneapolis, MN 55437 (612) 893-1813 Bowne of Los Angeles, Inc., Law Printers (213) 627-2200 > —— <2 —— — —_—s- ——s ee Page I ee I ons ccccncccincceevisesee | Pee. Re CID oon 5 ons cccccvcvenecevess 3 Fees Se SURE tne Ed Snind aN io vas 05 0 64ue 0 oe 5 A. Congress Enacted the Indian Gaming Regulatory Act, in Part, Pursuant to its Powers Under the Interstate Commerce Clause................. 5 B. Congress Expressly Contemplated Interstate Gaming Activity in IGRA................... 9 C. Congress’ Concern in IGRA with the States’ and the Commercial Gaming Industry's Economic Interests, as well as Tribes’ Interests, Implicates ND Neon uaess cuehececeee. ll D. IGRA_ Regulates Non-Indian Economic ec ea keene odin ts 6s oder ee ix 13 E. Indian Gaming Has a Substantial Effect on EE vec cdiwiesseenet de eee 14 F. Congress Enacted IGRA, in Part, to Combat i ee eeu iveisesctscesics 23 i cece i ee ices eaensaséeateceseas 27 ele cee e aR eeueN bobs sbe00esieC nex la-120a TABLE OF CONTENTS i TABLE OF AUTHORITIES Cases Atlantic Cleaners & Dryers, Inc. v. United States, 286 US. 427, $8 SAX. GF CAGED «vc dnscteeeeeee Beckman v. Mall, 317 U.S. 597, 63 S.Ct. 199 (1942) Bender v. Wickard, 319 U.S. 731, 63 S.Ct. 1326 (1968). 2... cccdcevcseecssépe ee Bowen v. Kendrick, 487 U.S. 589, 108 S.Ct. 2562 (ISBB) 0. ccccccoscucessnanceen sean California v. Cabazon Band of Mission Indians, 480 US. 22, 107 S.Ce, 1669 (IGF) «. se cdaceseees Caminetti v. United States, 242 U.S. 470, 37 S.Ct. 192 (IDET)... 00s0ccencecce nes sue Champion v. Ames, 188 U.S. 321, 23 S.Ct. 321 (i) re Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, ___. U.S. —__., 113 S.Ct. 2264 (1993) Department of Revenue of Oregon v. ACF Industries, ee ee Employees of the Dep't of Pub. Health and Welfare v. Missouri Dep't of Pub. Health and Welfare, 411 US. 279, 93 GLA. 16060 (00 eae < icissnseeeee Equal Employment Opportunity Commission v. Wyoming, 460 U.S. 226, 103 S.Ct. 1054 (1983) Federal Election Commission v. N.R.A. Political Vic- tory Fund, U.S. __, 115 S.Ct. 537 (1994) Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758 (30GB) .o. cccesewecwees eee Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824)... NE oe CS ree ne ee o - - TABLE OF AUTHORITIES CASES Page Heart of Atlanta Motel v. United States, 379 U.S. I ID cc ccc cccccccecccces 6,7 Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, IES ee 9 Hodel v. Virginia Surface Min. & Recl. Assn’n, 452 Sees ay OD Ms OO CEDUE) oc ccc cece cence. 6 Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377 Gs daWa ce ceddicscccccccss 7 Lac du Flambeau Band of Lake Superior Chippewa Indians v. Wisconsin, 770 F. Supp. 480 (W.D. Wis. esa atc cee cesccscccees 16, 20 Louisiana Public Service Commission v. Federal Communications Commission, 476 U.S. 355, 106 ie 7 eer eS re 10 New Mexico v. Mescalero Apache Tribe, 462 U.S. ee 15 Moskal v. United States, 498 U.S. 103, 111 S.Ct. 461 EEE Ee 25 Pennsylvania v. Union Gas Co., 491 U.S. 1, 109 S.Ct. Nek cscs ccccscccees 8 Perez v. United States, 403 U.S. 146, 91 S.Ct. 1357 NES EE 5, 6, 7, 8, 25 Sault St. Marie Tribe of Chippewa Indians v. Michi- gan, 800 F. Supp. 1484 (W.D. Mich. 1992)..... 16, 21 Seminole Tribe of Florida v. Florida, 11 F.3d 1016 eee cece ccesccccccces 5,19 Sorenson v. Secretary of Treasury, 475 U.S. 851, 106 eee s cece ccecccess 9 United States v. Cappetto, 502 F.2d 1351 (7th Cir. EO TEE 25 iv TABLE OF AUTHORITIES CASES Page United States v. Darby, 312 U.S. 100, 61 S.Ct. 451 CNN i 6 hi6 sae eeee ere eee 6, 7,8 United States v. Haley, 358 U.S. 644, 79 S.Ct. 537 SUN odsdaeneeud cans tnedieeee eee 6 United States v. Jarrett, 705 F.2d 198 (7th Cir. 1983) 25 United States v. Martino, 648 F.2d 367 (Sth Cir. SE sshe kes oh0endudsis dae 25 United States v. Menasche, 348 U.S. 528, 75 S.Ct. ee Pe re ee ee ee 25 United States v. Ohio, 385 U.S. 9, 87 S.Ct. 66 (1966) 6 U.S. Dept. of Labor v. Triplett, 494 U.S. 715, 110 Sia WS CR ss eines bccn bade cbeteecun, 7 Walters v. National Assn. of Radiation Survivors, 473 US. 305, 105 S.Ct. 3180 (1985) .. 0... ccc eeee 7 Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82 (1942) 6 Woods v. Miller, 333 U.S. 138, 68 S.Ct. 421 (1948) 6 STATUTES Communications Act of 1934, 47 U.S.C. §§ 151, SE wn ccaenntrasdbeueadecesaane seen 10 Indian Gaming Regulatory Act, 25 U.S.C. EE Gadi cave sda ueuaseeaunioens passim EE IE sc coc c x Gevceccevuececuteuean 14,19 ED vn 5 v0 bc ten dae sedhuseauauel 14 Es c's ob 6 cha deen we wee 19, 22, 23, 24, 25 EN. cn cen ie ehaseuednaaeeneeeue 2 on. es an 6 ane came erks 2 EN oe eee idea te ane acad 2 OL | a ere re ee 2 Vv TABLE OF AUTHORITIES STATUTES Page en I tens cree ese ds beeeis 2 I UPEIOIED soc nvcccccencceccsces 9 Section Z7IO(B)(Z)(A) ...ccccccccccccccccss 13 I 26 Section 2710(b) (2) (F) (ii) (II) ...........2... 26 ee 9 Fi GuCe iw ewer dice ccceccs 26 Section 2710(d) (7) (B) (iii) .................. 12 ert Cetdnag see é4cee be tsseens ened 13 RR ee 13 Oe ae ae 13 ES 65 hb 4b SAN 4d bd eN eee OA hoe 10 Interstate Horse Racing Act, 15 U.S.C. Section 3001 ass BA aNie wade eGd Keewes ee ees dann s 9 Johnson Act, 15 U.S.C. §§ 1171-1178 ............ 25 Ee ee 8, 25 Ge Se ED 6 Sk Sac edcedenencccceccers 10 OTHER AUTHORITIES Hearings Before the Subcommittee on Communica- tions of the Senate Committee on Commerce, 93rd Ces BER Rg Fare CITED ccnan ss Hicdedseye 10 S. Rep. No. 446, 100th Cong., 2d Sess. 1, 33 (1988) reprinted in 1988 U.S. Code Cong. & Admin. Scat uvianshdecwinnesce eens 4, 10, 13, 14, 26 Webster’s New Twentieth Century Dictionary, unabridged, at 362 (2d ed. 1983).............. 25 vi TABLE OF AUTHORITIES OTHER AUTHORITIES APPENDIX Department of the Interior, Bureau of Indian Af- fairs, Tribal State Compact List, (January 26, SO 4455 605140 04d0 deeds cae ee eeeehaess Oversight Hearing on the Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Committee of Indian Affairs, 103rd Cong., 2d Sess. 69 (May 17, 1994) (statement of Ada E. Deer, Assistant Secretary, Indian Affairs, Department of the Interior)................. Deloitte & Touche, A Historical Review of Gaming in the United States (1994) ................. KPMG Peat Marwick, Minnesota Indian Gaming Association, Economic Benefits of Tribal Gam- ing in Minnesota 1992 (1993) ............... Minnesota Planning, High Stakes: Gambling in ED ha co tees ch aceenendecaees Minnesota Planning, Minnesota Gambling 1993 ERR ay. ee ee Ser epee me pe ee Oversight Hearing on the Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Committee on Indian Affairs, 103rd Cong., 2d Sess. 246 (May 17, 1994) (statement of Dr. Michael K. Madden, Professor of Eco- nomics, University of South Dakota) ......... Oversight Hearing on the Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Committee on Indian Affairs, 103rd Cong., 2d Sess. 246 (April 26, 1994) (testimony of JoAnn Jones, Tribal Chair Wisconsin Winne- SSE axavenneccvehepasbacsowadasaes 8 1-2a 3-6a 7-49a 50-75a 76-79a 80-84a 85-9la Ne ee eR eek: it ene vii TABLE OF AUTHORITIES OTHER AUTHORITIES Oversight Hearing on the Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Committee on Indian Affairs, 103rd Cong., 2d Sess. 118 (April 26, 1994) (testimony of Bernard Bouschor, Chairman Sault Ste, Marie Tribe of Chippewa Indians)................. Oversight Hearing on the Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Committee on Indian Affairs, 103rd Cong., 2d Sess. 202 (April 26, 1994) (Letter from the Sault Area Chamber of Commerce to Governor John Engler)... ......eccscccseees Oversight Hearing on the Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Committee on Indian Affairs, 103rd Cong., 2d Sess. 203 (April 26, 1994) (Letter from Bruce J. Dodson, Mayor of St. Ignace, Michigan, to Tribal Chairman Bernard Bouschor Sault Ste. Marie Tribe of Chippewa Indians) . . Hearing Before the Committee on Indian Affairs on S.2230, 103rd Cong., 2d Sess. 226 (July 19, 1994) (statement of Ray Halbritter, Nation Representative Oneida Indian Nation of New Ee ee. on eo een eiia heise ben's 99-105a 106-109a 110-113a 114-120a ee ed No. 94-12 In the Supreme Court OF THE United States OCTOBER TERM, 1994 SEMINOLE TRIBE OF FLORIDA, Petitioner, vs. STATE OF FLORIDA, et al., Respondent. On Writ of Certiorari To the United States Court of Appeals For the Eleventh Circuit BRIEF OF AMICI CURIAE NATIONAL INDIAN GAMING ASSOCIATION, MINNESOTA INDIAN GAMING ASSOCIATION AND CALIFORNIA-NEVADA INDIAN GAMING ASSOCIATION IN SUPPORT OF PETITIONER I. Interest of Amici Curiae This brief of amici curiae National Indian Gaming Asso- ciation, Minnesota Indian Gaming Association and Califor- nia-Nevada Indian Gaming Association (hereinafter the “Associations”), is filed in support of petitioner Seminole Tribe of Florida pursuant to the written consent of all parties. The Associations are national and regional organiza- tions representing the interests of federaliy recognized tribal governments that depend on gaming under the Indian Gam- ing Regulatory Act, 25 U.S.C. sections 2701-2721 2 (“IGRA” or the “Act’’) to fund education, care for the elderly, housing, health care and other tribal governmental programs. Congress anticipated that in order to achieve the Act’s goals of tribal self-sufficiency and funding for impor- tant governmental projects, tribal gaming activities would be pursued in, and have an impact on, interstate commerce. Congress recognized the effects Indian gaming would have on interstate commerce and enacted IGRA, in part, to address those effects. Amici will also demonstrate that, just as Congress expected, Indian gaming in practice has had a significant impact on interstate commerce. The success of tribal governmental gaming depends in large part on the tribes’ ability to engage in what the Act classifies as “class III” gaming, which is clearly the most economically competitive form of gaming available.’ Con- gress provided, however, that in order to engage in class III gaming a tribe must either reach a Tribal-State compact or determine through court action that the state has chosen not to avail itself of the opportunity to regulate class III gaming. Amici share a concern that Congress’ carefully-crafted bal- ance of tribal and state interests, which conditions class III gaming on either achieving Tribal-State compacts — with ‘IGRA divides gaming into three classes. Class I gaming consists of social or traditional games, and is solely regulated by Tribes. See 25 U.S.C. §§ 2703(6), 2710(a) (1). Class I] gaming consists of bingo and similar games, as well as nonbanking card games, and is regulated by Tribes and the National Indian Gaming Commission. /d. at §§ 2703(7), 2710(a) (2). Class III gaming consists of all other forms of gaming, id. at § 2703(8), including those forms of gaming in which states and private interests are most often involved, including horse racing, lotter- ies, and games associated with casinos. Because of the competition from those sources, and their importance in the marketplace, tribes which are deprived of class III opportunities are likely not to derive the revenues which generate the jobs and economic development demonstrated be- low, at Section III(E) of this brief, which exemplify the kinds of results which can be achieved where the class III process has worked. 3 court-supervised mediation to overcome negotiating im- passes — or removing uninterested states from the process, not be frustrated by the Eleventh Amendment barrier erro- neously erected by the Eleventh Circuit’s opinion in this case, reported at 11 F.3d. 1016 (11th Cir. 1994). The lower court held that Congress lacks authority to abrogate the states’ sovereign immunity to provide the judicial supervi- sion necessary to carry out the class III process Congress so carefully designed. In erroneously determining that Florida could invoke its sovereign immunity to upset the delicate balance wrought by Congress in IGRA, the Eleventh Circuit incorrectly held that IGRA was enacted exclusively under the Indian Com- merce Clause, and that Congress lacked the power under that clause to abrogate state immunity. While the Indian Commerce Clause doubtlessly supports IGRA, and amici agree with petitioner Seminole Tribe that the Indian Com- merce Clause alone empowers Congress to abrogate state sovereign immunity where necessary to carry out its consti- tutional duties regarding Indian affairs, the Act makes clear that Congress was also acting pursuant to its powers over interstate commerce. An analysis of that power provides further support to petitioner’s position, as well as supplying an independent basis for upholding the Act’s class III compacting process. Il. Summary of Argument Congress enacted IGRA, in part, pursuant to its powers under the Interstate Commerce Clause, and Tribes are in fact engaged in such commerce. Congress was explicitly concerned in IGRA with the tribes’, states’ and commercial gaming industries’ interstate economic interests and impact. The Act anticipates that tribes will use the mails, tele- phones, broadcasting and other technologies in furthering the Act’s goals of promoting tribal self-sufficiency. Indeed, 4 congressional hearings and other forums that have examined the impact of tribal governmental gaming under IGRA are replete with examples of the Act’s effect on interstate commerce. Those effects include: major purchases and sales of food and other goods which typically move in interstate commerce; dependency on transportation programs which utilize common carriers and highways; extensive employ- ment for persons who commute from far beyond reservation boundaries with corresponding reductions in reliance on state and federal welfare programs; and dramatic upswings in tourism and visitors crossing state lines to enjoy tribal facilities. IGRA also addresses the need and means for combating organized crime,’ which subject this Court has repeatedly held implicates interstate commerce. IGRA’s references to the gaming industry generally and the reputa- tion and integrity of those who participate in it, its focus on controlling organized crime, as well as the substantial im- pact on commerce which Indian gaming actually has, more than amply evidence congressional intent to legislate over matters affecting interstate commerce. For all of these reasons, the Associations submit that Congress enacted IGRA, in part, under the Interstate Com- merce Clause. Amici suggest that the Eleventh Circuit’s contrary holding was erroneous, and respectfully request that the Court reverse the Eleventh Circuit’s opinion and judgment. ? Albeit little if any evidence of such crime in Indian Country has ever existed, largely due to tribes’ own vigorous implementation of regulatory and control standards. See California v. Cabazon Band of Mission Indians, 480 U.S. 202, 221, 107 S.Ct. 1083, 1094 (1987); S. Rep. No. 446, 100th Cong., 2d Sess. 1, 33 (1988) (Additional Views of Mr. McCain), reprinted in 1988 U.S. Code Cong. & Admin. News 3071, 3103 (hereinafter “Senate Report’). ee ers in aecee s 5 Il. Argument A. Congress Enacted the Indian Gaming Regulatory Act, in Part, Pursuant to its Powers Under the Interstate Commerce Clause The Eleventh Circuit erroneously concluded that Con- gress did not enact IGRA pursuant to its plenary powers over interstate commerce. Specifically, the court found that “alleviating a supposed burden on interstate commerce”’ was not among Congress’ purposes in enacting IGRA. Seminole Tribe of Florida v. Florida, 11 F.3d 1016, 1025-26 (11th Cir. 1994). In reaching this conclusion, the lower court misapprehended the broad scope of congressional power under the Interstate Commerce Clause. Congress’ power over interstate commerce is not liinited to alleviating pre- existing burdens thereon, as the Eleventh Circuit assumed. The Interstate Commerce Clause gives Congress the power to legislate with respect to all “commerce which concerns more states than one.” Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 194 (1824). The power generally allows Congress to reach at least three categories of problems: First, the use of channels of interstate or foreign com- merce which Congress deems are being misused, as, for example, the shipment of stolen goods (18 U.S.C. secs. 2312-2315) or of persons who have been kidnaped (18 U.S.C. sec. 1201). Second, protection of the instru- mentalities of interstate commerce, as for example, the destruction of an aircraft (18 U.S.C. sec. 32), or persons or things in commerce, as, for example, thefts from interstate shipments (18 U.S.C. sec. 659). Third, those activities affecting commerce. Perez v. United States, 403 U.S. 146, 150, 91 S.Ct. 1357, 1359 (1971). 6 When Congress regulates under the Interstate Commerce Clause, it only needs a rational basis for finding that the regulated activity substantially affects interstate commerce, and the means it employs need only be reasonably adapted to the ends sought. Hodel v. Virginia Surface Min. & Recl. Ass'n, 452 U.S. 264, 101 S.Ct. 235 (1981). The “substantial economic effect” test is easily satisfied, even where the regulated activity is seemingly only local in nature. See Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82 (1942) (regulation of wheat grown by a farmer wholly for home consumption was within Congress’ interstate commerce power because it supplied the grower’s needs which other- wise would have been satisfied by purchases in the open market). See also United States v. Ohio, 385 U.S. 9, 87 S.Ct. 66 (1966); (per curiam) United States v. Haley, 358 U.S. 644, 79 S.Ct. 537 (1959); (per curiam) Bender v. Wickard, 319 U.S. 731, 63 S.Ct. 1326 (1943) (per curiam); Beckman v. Mall, 317 U.S. 597, 63 S.Ct. 199 (1942) (per curiam). Congress need not even have interstate commerce as its primary motive when legislating under that power as is evident from the cases upholding the Civil Rights Act of 1964.° In Heart of Atlanta Motel v. United States, 379 U.S. >Nor must Congress recite by name the particular power under which it legislates. “The constitutionality of action taken by Congress does not depend on recitals of the power which it undertakes to exercise.” Woods v. Miller, 333 U.S. 138, 144, 68 S.Ct. 421, 424 (1948). See also Equal Employment Opportunity Commission v. Wyoming, 460 U.S. 226, 243 n.18, 103 S.Ct. 1054, 1064 n.18 (1983); Fullilove v. Klutznick, 448 U.S. 448, 476-78, 100 S.Ct. 2758, 2773-2774 (1980). In United States v. Darby, 312 U.S. 100, 61 S.Ct. 451 (1941), “a class of activities was held properly regulated by Congress without proof that the particular intra- state activity against which a sanction was laid had an effect on commerce.” Perez, 402 U.S. at 152, 91 S.Ct. at 1360. In Darby, the Court recognized that “Congress has sometimes left it to the courts to determine whether the intrastate activities have the prohibited effect on 7 241, 85 S.Ct. 348 (1964), the Court held that the Interstate Commerce Clause empowered Congress to regulate a motel located in downtown Atlanta that did not rent rooms to blacks. The requisite nexus to commerce existed because the motel was located near two interstate highways, derived 75 percent of its occupancy from out-of-state guests, and solicited business outside the state. The Court explained that Congress’ power “to promote interstate commerce also includes the power to regulate the local incidents thereof.” Id. at 258, 85 S.Ct. at 358. See also Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377 (1964) (despite restaurant’s distance from interstate transportation facilities, and despite lack of evidence that much of its business came from out-of- state travelers, a sufficient connection to interstate com- merce existed because — looking to the total incidence of the regulated activities on commerce — the restaurant bought 46 percent of its food from a supplier who in turn had purchased it from out of state). The Interstate Commerce Clause also gives Congress power to use prohibitions on the interstate transportation of the commerce, as in the Sherman Act... .” Darby, 312 U.S. at 120, 61 S.Ct. at 460. The fact that a statute does not contain congressional findings about the regulated activity’s impact on interstate commerce is not determinative of the statute’s constitutionality under the Interstate Commerce Clause. Cf. See Katzenbach v. McClung, 379 U.S. 294, 304, 85 S.Ct. 377, 384 (1964). Nor does “Congress need [to] make particularized findings in order to legislate.” Perez, 402 U.S. at 156, 91 S.Ct. at 1362. In this regard amici “note[s] the heavy presumption of constitutional- ity to which a ‘carefully considered decision of a coequal and representa- tive branch of our Government’ is entitled.” U.S. Dept. of Labor v. Triplett, 494 U.S. 715, 722, 110 S.Ct. 1428, 1432 (1990) (quoting Walters v. National Assn. of Radiation Survivors, 473 U.S. 305, 319, 105 S.Ct. 3180, 3188 (1985)). See also Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, __. U.S. ——, 113 S.Ct. 2264, 2287 (1993); Bowen v. Kendrick, 487 U.S. 589, 817, 108 S.Ct. 2562, 2579 (1988). 8 items or people in furtherance of “police power” or “general welfare” regulations. See, e.g., United States v. Darby, 312 U.S. 100, 61 S.Ct. 451 (1941) (upholding Fair Labor Standards Act’s wage and hour regulations for employees engaged in production of goods for interstate commerce, the statute’s prohibitions against interstate shipment of goods produced in violation of those regulations, and its criminal penalties for employing workers engaged in commerce in violation of those regulations). In Perez, this Court upheld the Consumer Credit Protection Act, 18 U.S.C. 891, et seq., which prohibited loansharking, even in entirely local activi- ties, noting that Congress had recognized that loan sharks “are in large part under the control of ‘organized crime,’ ” Perez, 402 US. at 147, 91 S.Ct. at 1358, and that organized crime, virtually by definition, operates on a national scale. See id. at 147 n. 1, 150, 91 S.Ct. at 1358 n.1, 1359. In short, the Interstate Commerce Clause “has grown to vast proportions in its applications,” Employees of the Dep't of Pub. Health and Welfare v. Missouri Dep't of Pub. Health and Welfare, 411 U.S. 279, 285, 93 S.Ct. 1614, 1618 (1973), such that “[i]t would be difficult to overstate the breadth or depth of the commerce power.” Pennsylvania v. Union Gas Co., 491 U.S. 1, 20, 109 S.Ct. 2273, 2284 (1989) (Brennan, J., plurality). Numerous aspects of IGRA reveal a sufficient nexus to commerce to bring the Act within Congress’ interstate commerce powers. First, Congress expressly contemplated interstate gaming activity in IGRA. Second, in enacting IGRA, Congress balanced the competing economic inter- ests of Indian Tribes, the states, and the commercial gaming industry. Third, IGRA regulates both Indian and non- Indian economic concerns. Fourth, Indian gaming has a substantial effect on interstate commerce, a fact that was well-known to Congress when it enacted IGRA. Finally, Congress enacted IGRA, in part, to assure that the nation- 9 wide problem of organized crime does not infiltrate Indian gaming. B. Congress Expressly Contemplated Interstate Gaming Activity in IGRA IGRA’s Senate Report expressly contemplates interstate gaming activity: In this regard, the Committee recognizes that tribes may wish to join with other tribes to coordinate their class II* operations and thereby enhance the potential of increasing revenues. For example, linking participant players at various reservations whether in the same or different states, by means of telephone, cable, television or satellite may be a reasonable approach for tribes to take. Simultaneous games participation between and among reservations can be made practical by use of computers and telecommunications technology as long as the use of such technology does not change the fundamental characteristics of the bingo or lotto games “While this comment was in the context of class II gaming, the same possibilities exist regarding class III gaming. Interstate simulcast wager- ing on horse races is but one example of interstate gaming within IGRA’s class III category. See, e.g., Interstate Horse Racing Act, 15 U.S.C. § 3001 ef seg. Moreover, IGRA’s provisions regarding the permissible scope of both class II and class III gaming contain precisely the same requirement —- namely, that the gaming activity be “located within a state that permits such gaming for any purpose by any person, organization or entivy.”” 25 U.S.C. § 2710(b)(1)(A)) (class II). Com- pare 25 U.S.C. 9 2710(d)(1)(B) (identical language regarding class III). As this Court has long held, identical words used in different parts of the same act are intended to have the same meaning. See Department of Revenue of Oregon v. ACF Industries, Inc., __. U.S. ——, 114S.Ct. 843, 849 (1994); Sorenson v. Secretary of Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 1606 (1986); Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 51 (1934); Atlantic Cleaners & Dryers, Inc. v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 609 (1932). 10 and as long as such games are otherwise operated in accordance with applicable Federal communications law. Senate Report st 9 (emphasis added). The Senate Report’s reference to Federal communica- tions law also suggests Congress’ concern with interstate commerce, for Congress’ power to regulate the communica- tions industry flows from its interstate commerce power. See, e.g., Louisiana Public Service Commission v. Federal Communications Commission, 476 U.S. 355, 370-71, 106 S.Ct. 1890, 1899-1900 (1986) (purpose of Communications Act of 1934, 47 U.S.C. §§ 151, 152(b), is to regulate interstate commerce in communication). See also Federal Election Commission v. N.R.A. Political Victory Fund, U.S. —~, 115 S.Ct. 537, 542 (1994) (citing Hearings Before the Subcommittee on Communications of the Senate Committee on Commerce, 93rd Cong., Ist Sess., 70-71 (1973)); 42 U.S.C. § 2000e(g) (defining “commerce” as including “communication among the several states”). Ad- ditionally, the Act explicitly exempts tribal marketing efforts from the criminal sanctions ordinarily imposed in connec- tion with the transmission of gambling information by tele- phone and through the mails. See 25 U.S.C. § 2720. In sum, the regulation of interstate gaming activities such as those Congress contemplated when enacting IGRA are plainly within Congress’ interstate commerce power. 11 C. Congress’ Concern in IGRA with the States’ and the Commercial Gaming Industry’s Economic Interests, as well as Tribes’ Interests, Implicates Interstate Commerce In enacting IGRA, Congress was concerned with balanc- ing the interests of the states and the commercial gaming industry with those of Indian tribes: S. 555 [IGRA] is the outgrowth of several years of discussions and negotiations between gaming tribes, states, the gaming industry, the administration, and the Congress, in an attempt to formulate a system for regulating gaming on Indian lands. In developing the legislation, the issue has been how best to preserve the right of tribes to self-government while, at the same time, to protect both the tribes and the gaming public from unscrupulous persons. An additional objective inherent in any government regulatory scheme is to achieve a fair balancing of competitive economic interests. Senate Report at 1-2 (emphasis added). The Senate Report also noted that “[a]s the debate unfolded, it became clear that the interests of the states and of the gaming industry [included] ... protection of their own games from a new source of economic competition.” Senate Report at 33 (Additional Views of Mr. McCain).° Congress’ concern with balancing competing economic interests is apparent on IGRA’s face, for the Act provides that “[i]n determining... whether a state has negotiated [with a Tribe] in good faith [for a class III] compact], the court — (I) may take into account... adverse economic *See also Senate Report at 36 (Additional Views of Mr. Evans) (“Ironically, the strongest opponents of tribal authority over gaming on Indian lands are from states whose liberal gaming policies would allow them to compete on an equal basis with the tribes”’). 12 impacts on existing gaming activities...” 25 U.S.C. § 2710(d) (7) (B) (iii) (emphasis added). IGRA’s Senate Report makes the same point: The bill allows states to consider negative impacts on existing gaming activities. That is not to say that the bill would allow states to reject Indian gaming on the mere showing that Indian gaming will compete with non-Indian games. Rather, states must show that eco- nomic consequences will be severe and that they will clearly outweigh positive economic consequences. Senate Report at 14 (emphasis added). See also Senate Report at 18-19 (“[I]f the court finds for the tribe, it will order a 60-day negotiation period and may take into account public interest, public safety, criminality, financial integrity, and adverse economic impacts on existing gaming activities’’). Congress’ explicit recognition that one “objective” of IGRA is to balance competing economic interests, and its direction that federal courts may consider such competition in determining the states’ good faith, is strong evidence that Congress adopted the Act in part under its interstate com- merce power.° *Congress also balanced related concerns: After lengthy hearings, negotiations and discussions, the Commit- tee concluded that the use of compacts between tribes and states is the best mechanism to assure that the interests of both sovereign entities are met with respect to the regulation of complex gaming enterprises such as parimutuel horse and dog racing, casino gaming, jai alai and so forth. The Committee notes the strong concerns of states that state laws and regulations relating to sophisticated forms of class III gaming be respected on Indian lands where, with few exceptions, such laws and regulations do not now apply. The Committee balanced these concerns against the strong tribal opposi- tion to any imposition of state jurisdiction over activities on Indian lands. The Committee concluded that the compact process is a 13 D. IGRA Regulates Non-Indian Economic Concerns IGRA directly regulates state and commercial gaming interests by barring them from owning gaming projects on Indian lands. Specifically, the Act excludes all but Indian tribes from having a “proprietary interest and responsibility for the conduct of any gaming activity” on Indian land. 25 U.S.C. § 2710(b) (2) (A). The Act also controls non-Indian economic concerns by regulating contracts between tribes and other entities related to the management of tribal gaming projects. See 25 U.S.C. § 2711. “As used in section 12 and throughout the bill, the term ‘management contract’ refers to agreements governing the overall management and operation of an Indian gaming facility by an entity other than the tribe or its employees.” Senate Report at 12-13 (emphasis added). IGRA generally limits the terms of management contracts, see id. at § 2711(b) (5), and generally limits the manager’s fees. See id. at § 25 U.S.C. § 2711(c) (1). See also Senate Report at 8. Congress intended that these limitations on non-Tribal viable mechanism for setting various matters between two equal sovereigns.... In the Committee’s view, both state and tribal governments have significant governmental interests in the conduct of class III] gaming.... A state’s governmental interests with respect to class III gaming on Indian lands include the interplay of such gaming with the state’s public policy, safety, law and other interests, as well as impacts on the state’s regulatory system, including its economic interest in raising revenue for its citizens. /f is the Committee's intent that the compact requirement for class Ill not be used as a justification by a state for excluding Indian tribes from such gaming or for the protection of other state-licensed gaming enterprises from free market competition with Indian tribes. Senate Report at 13 (emphasis added). 14 . entities apply retroactively to contracts that preexisted the Act: In the area of gaming where many factors other than ordinary business risk enter into the equation, the Committee has no reluctance in requiring changes to existing gambling enterprise contracts, whether or not such contracts have been given a stamp of approval by the Secretary. Senate Report at 15. IGRA’s direct regulation of non-Indian economic con- cerns is further evidence that Congress adopted the Act, in part, under its interstate commerce power. E. Indian Gaming Has a Substantial Effect on Interstate Commerce In enacting IGRA, Congress found that “numerous In- dian tribes have become engaged in or have licensed gaming activities on Indian lands as a means of generating tribal governmental revenue.” 25 U.S.C. § 2701(1). Congress also found that “a principal goal of Federal Indian policy is to promote tribal economic development, tribal self-suffi- ciency, and strong tribal government.” Jd. at § 2701 (4). As Indian Tribes engage in the economic activities IGRA permits, they necessarily have a substantial impact on inter- state commerce. Increased tribal self-sufficiency reduces tribal dependence on federal and state funding, programs, and support. This impacts interstate commerce by reducing federal and state expenditures, with related implications for federal taxation. Further, as an industry that had generated more than $100 million on a national aggregate basis as of 1988’ — and which has continued to grow in the subsequent seven years — the Indian gaming industry impacts com- "See Senate Report at 20. 15 merce directly by: (1) purchasing, leasing, and renting equipment and supplies from non-Indian businesses through interstate commerce; (2) employing thousands of non- Indians to help finance, design, construct, manage, and operate Indian gaming facilities; and (3) inviting and serv- ing out-of-state non-Indian customers. In California v. Cabazon Band of Mission Indians, 480 U.S. 202, 107 S.Ct. 1083 (1987), this Court recognized the potential scale of Tribal gaming projects and their impact not only on the Tribes but on the commerce it attracted: [Tribes engaged in gaming] have built modern facili- ties which provide recreational opportunities and ancil- lary services to their patrons, who do not simply drive onto the reservations, make purchases and depart, but spend extended periods of time there enjoying the services the Tribes provide. The Tribes have a strong incentive to provide comfortable, clean, and attractive facilities and well-run games in order to increase at- tendance at the games. The tribal bingo enterprises are similar to the resort complex, featuring hunting and fishing, that the Mescalero Apache Tribe operates on its reservation through the “concerted and sustained” management of reservation land and wildlife resources. New Mexico v. Mescalero Apache Tribe, 462 US., at 341, 103 S.Ct., at 2390. The Mescalero project gener- ates funds for essential tribal services and provides employment for tribal members. Id. at 219-20, 107 S.Ct. at 1093-94. Where states have participated in the compact process, tribes and surrounding communities have dramatically real- ized the important economic benefits Congress intended 16 IGRA to afford.’ Class III operations, which are only possible after a Tribal-State Compact has been reached,’ vividly demonstrate the inevitable impact such activities have on commerce: In the states where Indian tribes and states have worked together on a government-to-government basis, the objectives of the IGRA have begun to materialize to the benefit of both governments. Tribes have used gaming revenues to provide better governmental ser- “Sometimes the most important gains for tribes and their states have been in situations where compacts were reached reluctantly through litigation, where the Eleventh Amendment was not an impediment. See, e.g., Lac du Flambeau Band of Lake Superior Chippewa Indians v. Wisconsin, 770 F. Supp. 480 (W.D. Wis. 1991); Sault St. Marie Tribe of Chippewa Indians v. Michigan, 800 F. Supp. 1484 (W.D. Mich. 1992). *The Bureau of Indian Affairs reports that as of January 26, 1995, 98 tribes in 22 states have entered into 114 Tribal-State compacts under IGRA. See Department of Interior, Tribal-State Compact List, January 26, 1995, Appendix at 2a. Despite the apparent success for both tribes and states once a compact is signed, most states which have signed compacts first compelled litigation or threatenc.J sovereign immunity defenses if tribes sought relief under IGRA. Some states, like Washing- ton, relying on the Eleventh Amendment, demanded that Tribes either accept a limited, generic “cookie cutter” compact dictated by the state and not the result of negotiations as Congress intended, or face years of litigation over the immunity issue. Meanwhile, tribal and congressional goals for self-sufficiency remain frustrated. Assistant Secretary Deer noted the difficulties caused by noncompacting states: In several non-Indian communities tribal gaming has proven to be a catalyst for their revitalization. In those states that have refused to negotiate with tribes, the tribes’ efforts at achieving economic stability and self-sufficiency have been effectively frustrated. Testimony of Ada Deer, Senate Hearings, May 17, 1994, at 69, Appendix at 4a. 17 vices for tribal members, better health care, higher quality education and employment. Oversight Hearings on ihe Need for Amendments to the Indian Gaming Regulatory Act: Hearing Before the Com- mittee of Indian Affairs, 103rd Cong., 2d Sess. 69 (1994) (testimony of Ada E. Deer, Assistant Secretary, Indian Affairs, Department of the Interior) hereafter (“Senate Hearings”), Appendix at Sa. Better health care, education, employment and other social benefits to Indian reservations impact everyone, Tribes and states, Indians and non-Indians alike. | In Minnesota, for example, the number of welfare recipi- ents — both Indian and non-Indian — under the federal Aid to Families with Dependent Children program decreased by 14 percent between 1987 and 1992 in eight non-urban counties with Indian gaming, whereas statewide the number of welfare recipients increased 17 percent for the same period. See Deloitte & Touche, A Historical Review of Gaming in the United States, Appendix to Senate Hearings, May 17, 1994, at 207, Appendix at 36a. Minnesota entered into compacts with tribes soon after IGRA was passed. As a study conducted for the amicus Minnesota Indian Gaming Association (MIGA) by KPMG Peat Marwick has docu- mented, Minnesota witnessed remarkable growth of tribal self-sufficiency and freedom from federal welfare depen- dency. Jd. Indian gaming has directly created nearly 10,000 jobs for Minnesotans, and has indirectly created an esti- mated 20,000 additional jobs. Jd. Of particular significance in terms of Indian gaming’s impact on commerce is the fact that approximately 7,600 of those jobs are supported by tourism expenditures. Jd. A number of these jobs are being filled by persons who live more than 25 miles from the reservation, particularly where tribal lands are remote. See KPMG Peat Marwick, Minnesota Indian Gaming Associa- tion, Economic Benefits of Tribal Gaming in Minnesota 18 1992, April, 1993, p. 14, Appendix at 68a. The impact on highway travel is obvious. Similarly, a study conducted for the State of Minnesota to assist in its long-range planning determined that /5 percent (approximately 900,000) of the customers visiting Minne- sota Indian casinos were from outside the state. See Minne- sota Planning, High Stakes: Gambling In Minnesota, March, 1992, at 12, Appendix at 77a. A 1993 update to that report observed: Out-of-state visitors to [Tribal government] casinos are having a significant economic effect on Minnesota. According to the Department of Trade and Economic Development these visitors were responsible for a $245 million dollar increase in the state’s gross product and the creation of 7,600 jobs. Minnesota Planning, Minnesota Gambling 1993, May, 1993, at 17, Appendix at 84a (emphasis added). The 1993 report noted that the number of out-of-state visitors had increased from 15 to 20 percent. Jd. at 14, Appendix at 82a. A survey of Tribal government gaming employees — again, both Indian and non-Indian — in Wisconsin revealed that 820 employees in 1992 had been welfare recipients prior to going to work for a tribe’s gaming project, saving the state approximately $1.6 million and the federal government $1.4 million. See Deloitte & Touche, supra, at 209, Appen- dix at 38a. Tribal governments account for approximately five per- cent of the American entertainment market related to gam- ing. While small in relative terms compared to the 34 percent market share held by private casinos and the 38 percent share occupied by state lotteries — the latter being by far the largest players in the gaming marketplace — tribal governments’ gaming activities have a tremendous impact in absolute terms on Indian and neighboring com- munities. Jd. at 187, Appendix at 16a. The size and breadth of Indian gaming projects where states have negotiated 19 tribal gaming compacts, and the impact of that activity on commerce, must be considered in determining what Con- gress was attempting to regulate under IGRA.'° In South Dakota, the impact tribal gaming projects have had on tourism is even more pronounced. In written testi- mony submitted to the Senate Hearings, Dr. Michael K. Madden, Professor of Economics, University of South Da- kota, reported that prior to Indian gaming, aggregate travel spending in the five counties which now host tribal gaming projects totaled only about $8 million. By 1993, after the tribes began their class III operations pursuant to Tribal- State compacts,'' travel spending had increased in those counties to about $31 million, an increase of 281 percent. See Madden, Preliminary Estimates of Economic Impacts Related to Tribal Gaming in South Dakota, Senate Hear- ings, May 17, 1994, at 246, Appendix at 87a. Professor Madden noted other benefits to Tribal and state economies: '°As noted above, the Eleventh Circuit superficially dismissed the impact of Indian gaming on interstate commerce as irrelevant to Congress’ purpose in enacting IGRA, but its analysis focused only on the control of organized crime: Congress’ concern with organized crime was not that such activities would burden interstate commerce, but rather that prohibition of organized crime would “ensure that the Indian tribe is the primary beneficiary of the gaming operation, and... assure that gaming is conducted fairly and honestly by both the operator and the players.” 25 U.S.C. § 2702(2). In addition, Congress wanted to criminalize the involvement of organized crime in order to “promote[ |] tribal economic development, self-sufficiency, and strong tribal govern- ment.” 25 U.S.C. § 2702(1). In analyzing Congress’ goals, it is clear that alleviating a supposed burden on interstate commerce was not among them. Seminole, 11 F.3d at 1026. See discussion infra at Section III(F) of this brief. '' But not without substantial litigation delays. See fns. 8, 9, Supra. 20 New wages and salaries in the regions surrounding the tribal casinos are estimated to be more than $25 million. Because most regions surrounding the tribal casinos are of low population, these added earnings have produced significant relative impacts on personal income within communities. .. . The use of [profits from tribally-owned casinos] vary from tribe to tribe. Some of the resources have been allocated to infrastructure improvements relating to the casinos themselves. Examples include lodging and camping facilities as well as additions to casino capac- ity. Other economic development programs have also been pursued. Training and educational programs for tribal members have been instituted or expanded within a number of the tribes. Id. at 247, Appendix at 89a. Perhaps the use of tribal gaming revenues in specific instances best illustrates IGRA’s impact on commerce as well as on the tribes themselves. The Wisconsin Winnebago Nation has nearly 5,000 members, and was impoverished for many years. The opportunity to use gaming under IGRA’s compacting process, as the Wisconsin tribes were able to do only after protracted litigation,'? not only benefitted the Winnebago Nation in countless ways, but contributed signif- icantly to the community around it. As Tribal Chair JoAnn Jones so eloquently explained to Congress: Indian gaming is not about gaming. It is about survival and bringing my people out of the third world conditions that they have lived in for generations. It is about sovereignty and the right of one government to operate free from the interference of another govern- '? See Lac du Flambeau Band, 770 F. Supp. 480. ee 21 ment. Finally, it is about an agreement and compromise worked out among sovereign governments. When Congress established the National Indian Gaming Regulatory Act it said the Act had three purposes: Promote tribal economic development, self sufficiency, and strong tribal government. Indian gam- ing in Wisconsin is doing all of these things and more. The Winnebago Nation employs more than 2000 people. Nearly 80% of these people are employed at our gaming enterprises. Employment has quadrupled in the last two years. More than 60% of these employees are non-Indian. More than 300 of our gaming employees came from the welfare rolls. Statewide, Indian gaming jobs took 800 people off welfare and 1400 more from the unemployment rolls. Casino income is the sole support for the families of nearly 80% of the casino employees. According to [state] Health & Social Ser- vice Secretary Gerald Whitburn, state aid to Indian families has dropped. He says that Indian gaming is a major reason for this drop. Testimony of JoAnn Jones, Tribal Chair, Wisconsin Winne- bago Nation, Senate Hearings, April 26, 1994, at 68, Ap- pendix at 96a-97a. In Michigan, the Sault St. Marie Tribe of Chippewa Indians, with a citizenship of approximately 20,000 mem- bers, has experienced similar results, most of which came after the State of Michigan, following extended periods of negotiation and litigation (in this instance spanning five years), entered into Tribal-state compacts.'* The Tribe is the sole owner and operator of all its gaming operations. See Testimony of Bernard Bousher, Tribal Chairman, Senate Hearings, April 27, 1994, at 118, Appendix at 10la. Like the '? See Sault St. Marie Tribe of Chippewa Indians, 800 F. Supp. 1484. 22 Wisconsin Winnebago Nation, which employs over 300 persons in connection with surveillance, security and inter- nal accounting controls,'* the Sault St. Marie Tribe has invested substantial resources in order to satisfy the congres- sional mandate of providing gaming entertainment that is conducted fairly and honestly, not only for the Tribe, but for the customers as well. Bousher at 119-120, Appendix at 103a-105a. See 25 U.S.C. § 2702(2). And as with tribes in other states, many of Sault St. Marie’s patrons are tourists, thus developing the economy of the reservation as well as for the entire community. See, e.g., Letter from Sault Area Chamber of Commerce to Governor John Engler, dated May 13, 1993, Senate Hearings, April 26, 1994, at 202, Appendix at 108a-109a. Mayor Bruce J. Dodson of nearby St. Ignace, Michigan, reports that in an area of 47 percent unemployment, “every able bodied person is now working in a three county area... the Tribe has certainly been one of the main contributors.” Senate Hearings, supra, at 203, Appendix at 112a. In New York State, the Oneida Nation, which had a 44 percent unemployment rate in 1990, is now the second largest employer in Central New York. See testimony of Gaiongwilode, Tribal Chairman, Senate Hearings, July 19, 1994, at 226, 243, Appendix at 117a-120a. The Oneida Nation’s transformation has been typical of other tribes which finally obtained the Tribal-State compact Congress envisioned: Thanks to revenue from the casino, the Nation is able to house, feed, and educate its people, to nurture and enhance the Oneida’s unique culture, to repossess ancestral homeland, to significantly benefit the local community, to research and develop other business “Jones Testimony, supra, at 67, Appendix at 94a. 23 enterprises, and to otherwise provide for the seven generations yet to come as our culture requires us to do. Id. at 227, Appendix at 117a. Indeed, while the effect of Indian gaming on surrounding communities, the states, and commerce generally has been significant, and clearly was within Congress’ sights when it enacted IGRA, the uses of gaming revenues on the reserva- tions themselves have reinforced the importance of tribal participation for governmental purposes in this burgeoning aspect of the entertainment and leisure industry. According to the MIGA study, for example, in 1992 Minnesota Tribes provided over $17 million for tribal housing, $39.5 million in direct services, and $800,000 in charitable donations. An- other $4 million was generated for human services and tribal educational programs. See MIGA Study, at 10, Appendix at 64a. Thus it is apparent that — just as Congress anticipated — Indian gaming has had a substantial impact on interstate commerce. F. Congress Enacted IGRA, in Part, to Combat Organ- ized Crime Congress declared that IGRA’s purpose is, in part, “to provide a statutory basis for the regulation of gaming by an Indian tribe adequate to shield it from organized crime and other corrupting influences, to ensure that the Indian tribe is the primary beneficiary of the gaming operation, and to assure that the gaming is conducted fairly and honestly by both the operator and players... .” 25 U.S.C. § 2702(2).”° 'SCongress’ concern with crime and law enforcement is palpable in the Senate Report. See Senate Report at 20 (“The need for Federal and/or state regulation of gaming, in addition to, or instead of, tribal regulation, has been expressed by various state and Federal law enforce- ment officials out of fear that Indian bingo and other gambling enter- 24 See also Senate Report at 13 (“The purpose of the Act is to provide a statutory basis for operating Indian gaming, to promote economic development, to shield tribes from organ- ized crime”). Reading these three distinct purposes as if they were one, the Eleventh Circuit concluded that Con- gress’ only concern with “organized crime” was that it might prevent Indian tribes from being the primary beneficiary of the gaming operation: “In analyzing Congress’ goals, it is clear that alleviating a supposed burden on interstate com- merce was not among them.” 11 F.3d at 1026. There are at least three problems with the Eleventh Circuit’s reasoning. First, section 2702(2) plainly sets forth three distinct, though related, purposes. For example, it is conceivable that an Indian tribe might not be the primary beneficiary of gaming activity even in the absence of organized crime. Similarly, fair and honest gaming does not insure that the Indian tribe is the primary beneficiary of the gaming activ- ity. Second, the Eleventh Circuit’s interpretation of sec- tion 2702(2) suggests that the presence of organized crime in Indian gaming is perfectly acceptable so long as the Indian tribe remains the primary beneficiary of the gaming activity. It is difficult to imagine Congress embracing such a notion. Third, if the lower court’s interpretation were cor- prises may become targets for infiltration by criminal elements”). See also id. at 5 (“Representatives of states with experience in regulating some forms of gaming activities, such as Nevada and California, have expressed concern over the potential for the infiltration of organized crime or criminal elements in Indian gaming activities. The criminal division of the U.S. Department of Justice has expressed similar concerns, although as stated in the additional views of Senator John McCain, in 15 years of gaming activity on Indian reservations, there has never been one clearly proven case of organized criminal activity”); id at 6 (“the Committee has carefully considered the law enforcement concerns of tribal and state governments, as well as those of the Federal Government, and the need to fashion a means by which differing public policies of these respective governmental entities can be accommodated and reconciled”). 25 rect, Congress’ repeated use of commas'’® and the word “to” before each of the three purposes stated in 25 U.S.C. section 2702(2) would be surplusage. That result “violates the established principle that a court should ‘give effect, if possible, to every clause and word of a statute.’ Moskal v. United States, 498 U.S. 103, 109-110, 111 S.Ct. 461, 466 (1990) (quoting United States v. Menasche, 348 U.S. 528, 538-39, 75 S.Ct. 513, 519-20 (1955) ). In sum, the Eleventh Circuit read section 2702(2) too narrowly. Congress plainly intended IGRA to, inter alia, combat organized crime. “es Congress has expressly found that “ ‘organized crime is interstate in character,” Perez, 402 U.S. at 147 n.1, 91 S.Ct. at 1358 n.1 (quoting 18 U.S.C. § 891, Notes), and that “[o]rganized crime operates on a national scale.” Jd. at 150, 91 S.Ct. at 1359. Consistent with this fact, Congress has long enacted criminal statutes under its interstate com- merce power. See, e.g., Caminetti v. United States, 242 U.S. 470, 37 S.Ct. 192 (1917) (White Slave Traffic Act); Champion v. Ames, 188 U.S. 321, 23 S.Ct. 321 (1903) (Federal Lottery Act); United States v. Jarrett, 705 F.2d 198, 202-03 (7th Cir. 1983) (Hobbs Act); United States v. Martino, 648 F.2d 367, 381 (Sth Cir. 1981) (Racketeer Influenced and Corrupt Organizations Act); United States v. Cappetto, 502 F.2d 1351, 1356 (7th Cir. 1974) (1975) (Organized Crime Control Act). Congress has also criminalized the manufacture, recondi- tion, repair, sale, transport, possession, or use of gambling devices in interstate commerce. See Johnson Act, 15 U.S.C. §§ 1171-1178. The Johnson Act expressly applies in Indian country. See id. at § 1175. IGRA provides, however, that 15 U.S.C. section 1175 does not apply to any gaming con- ‘Congress’ use of commas between the three purposes set forth in section 2702(2) indicates a “separation of sentence elements... [or] items in a series...” Webster's New Twentieth Century Dictionary, unabridged, at 362 (2d ed. 1983). 26 ducted under a Trihal-State compact that is in effect and is entered into by a state in which gambling devices are legal. See 25 U.S.C. § 2710(d) (6). See also Senate Report at 15. Thus Congress, pursuant to its interstate commerce power, was concerned with gaming devices, and chose to allow the Johnson Act prohibitions to remain in effect absent a class II] compact satisfying the requirements of 25 U.S.C. section 2710(d) (6). Related to its concerns regarding organized crime was Congress’ determination that tribes adopt exclusionary stan- dards of suitability for “primary management officials” and “key employees.” See 25 U.S.C. § 2710(b)(2)(F) (made applicable to class III gaming at 25 U.S.C. § 2710(d)(1)(ii)). Those employees must meet criteria relating to the “public interest” and the effective regulation of “gaming.” Jd. at § 2710(b) (2) (F) (ii) (II). In sum, Congress’ concerns about organized crime and gaming industry integrity standards further demonstrate the interstate commerce nature of IGRA, and the error com- mitted below in rejecting those factors. 27 IV. CONCLUSION IGRA was enacted in part to address Congress’ concern with issues that arise under its Interstate Commerce Clause authority. The Eleventh Circuit Court of Appeal’s conclu- sion that respondent State of Florida is entitled to a judg- ment of dismissal because there was no exercise of that authority was in error and should be reversed, and the case remanded for further proceedings under IGRA. Respectfully submitted, LEVINE & ASSOCIATES JEROME L. LEVINE FRANK R. LAWRENCE 2049 Century Park East, Suite 710 Los Angeles, California 90067 (310) 553-8400 Counsel of Record BLUEDOG, OLSON & SMALL Kurt V. BLUEDOG 5001 W. 80th Street, Suite 670 Minneapolis, MN 55437 (612) 893-1813 March 31, 1995 la Appendix 1 3a | Appendix 2 TRIBAL-STATE COMPACT LIST TRIBAL INFORMATION FOR THOSE WITH APPROVED TRIBAL-STATE COMPACTS AS OF JANUARY 26, 1995 98 TRIBES — 22 STATES — 114 COMPACTS 24 AMENDMENTS/ADDENDUMS THIS LIST IS UPDATED AS NEW COMPACTS/AMENDMENTS ARE PUBLISHED IN THE FEDERAL REGISTER BY THE INDIAN GAMING MANAGEMENT STAFF, OFFICE OF THE COMMISSIONER, BUREAU OF INDIAN AFFAIRS, (202) 219-4068 * Tribe has compact(s) with more than one state. ** Tribe has more than one compact for different types of games. 4a INDIAN GAMING REGULATORY ACT HEARING BEFORE THE COMMITTEE ON INDIAN AFFAIRS UNITED STATES SENATE ONE HUNDRED THIRD CONGRESS SECOND SESSION ON OVERSIGHT HEARING ON THE NEED FOR AMENDMENTS TO THE INDIAN GAMING REGULATORY ACT MAY 17, 1994 WASHINGTON, DC PART 3 Sa APPENDIX ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD PREPARED STATEMENT OF ADA E. DEER, ASSISTANT SECRETARY, INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR, Good Afternoon Mr. Chairman and members of the Committee, I am pleased to be here with you today to share with you the experiences of the Department of the Interior in administering provisions of the Indian Gaming Regula- tory Act (IGRA). I am accompanied by Mr. John Duffy, Counselor to the Secretary, who will present the Depart- ment’s testimony. I do however, want to make some general comments on Indian gaming before Mr. Duffy offers the Department's testimony. The President’s remarks in his historical meeting with the tribes, the follow-up Listening Conference and my 10 months as Assistant Secretary all make clear that tribe- owned gaming is an important economic development activ- ity for Indian tribes. In the States where Indian tribes and the States have worked together on a government-to-government basis, the objectives of the IGRA have begun to materialize to the benefit of both governments. Tribes have used gaming revenues to provide better governmental services for tribal members, better health care, higher quality education and employment. In several non-Indian communities tribal gaming has proven to be a catalyst for their revitalization. In those States that have refused to negotiate with tribes, the tribes’ efforts at achieving economic stability and self- sufficiency have been effectively frustrated. Moreover, in some highly publicized conflicts, protracted and costly liti- 6a gation has resulted creating a major disincentive for tribes and States to work cooperatively. Second, while at times tribes may feel overwhelmed and frustrated, I believe they have shown great determination, hope, and in most cases, willingness to work with the States to reach amicable resolutions. Although the implementation of the IGRA has some- times been contentious and difficult, overall our experience has been positive. To date we have approved 107 compacts, 12 amendments representing agreements between 90 tribes and 19 states. In closing I want to say that we will continue to support Indian gaming as an important means of economic develop- ment. And, as Assistant Secretary, I am prepared to work with the tribes in their efforts to provide direction and leadership on this critical issue. Thank you. Ta Appendix 3 8a INDIAN GAMING REGULATORY ACT HEARING BEFORE THE COMMITTEE ON INDIAN AFFAIRS UNITED STATES SENATE ONE HUNDRED THIRD CONGRESS SECOND SESSION ON OVERSIGHT HEARING ON THE NEED FOR AMENDMENTS TO THE INDIAN GAMING REGULATORY ACT MAY 17, 1994 WASHINGTON, DC PART 3 L ii 9a A Historical Review of Gaming in the United States April 26, 1994 ee ee ee ee ae yeet | Rick nit ida Tribe of indians Chairman ‘Daniel Tucker ’ Syguan Band ol Mission Indians 904 Pennsylvania Avenuc, SE Washington, DC 20003 (202) 546-7711 © Fax (202) 546-1755 Esecuteve Director Puble Relatons Director S. Timothy Wapato A. Gay Kingman Colville Contederated Tribes Cheyenne River Sioux ee eee > °¢ * he * e e *-. - - ~". ile » 7 é fistory of : aa U.S. Gaming 4 ij aR 4: bs Ste ‘fit ' ‘ “Ss: ve ,°8 a ite. n ~ f ‘ : vv“ ° e -« oe tg *. td : ac ’ ' yoe° athe a: 7. oe i wa . , ea rahe hd *. , fs, ee Pr net 3 ’ _ Tee ee ee ee 12a HISTORY OF US GAMING Origins of U.S. Gaming The United States is in what has been referred to as the “third wave” of legalized gaming, in that this is the third time that gaming, in one form or another, is available virtually everywhere in America. The first wave of gaming began in the colonial era and lasted through the Civil War. The second wave began after the Civil War and lasted through the early twen#eth century when most forms of gaming throughout the U. S. were banned. The third wave began in 1964, with the passage of legislation legalizing a lottery in New Hampshire. Lotteries dominated the first wave and were used to help finance the colonization of America. As such colonization took place, the popularity of the lotteries increased and they were used to finance projects too massive for traditional government or private financing sources. Institutes of higher learning such as Harvard and Princeton were financed in part from tax proceeds generated by lotteries. The nation’s first lotteries were considered respectable and not a form of gaming, but rather, a voluntary form of tax collection patronized by the most respectable citizens. By 1831, lotteries were sponsored by cight states and wagers exceeded $66 million, five times the annual federal budget. By the time the Civil War started, scandals and swindles plagued the lotteries and a wave of morality swept the nation. This soon led to the abolition of lotteries, and the first wave of legalized gaming receded. The second wave of legalized gaming followed the Civil War. Lotteries made a comeback and other forms of gaming proliferated. This comeback was the strongest in the Recon- structed South as a means of dealing with the extreme financial difficulties that resulted from the war. Gaming also l3a thrived in the frontier cities of the West and in most major urban areas. During the 1840s and 1850s, the gold and silver strikes in California and Nevada caused an influx of miners and others into those territories. Gaming became an integral part of the boomtown atmosphere. Gaming also thrived in the cities of San Francisco, Kansas City and Denver, all of which were known as gaming capitals in the 1850s. During this period, anti-gaming legislation was passed but was not effective and only served to drive gaming underground where it was tolerated if not supported by law enforcement officials. However, the second wave did not persist, and by 1910, the year Nevada.banned casinos, legal gaming was virtually non-existent in the U.S. By the 1930’s casinos had returned to Nevada and horse race wagering had returned to twenty- one states. Lotteries were not legalized again until 1964 when such activity was legalized in New Hampshire, and, according to some experts, this ushered in the third wave of legalized gaming in America. Despite a weak economy the gaming industry in the U.S. has exhibited an impressive growth rate. The morality argu- ment has lessened as governments and churches become big players. The industry has become a huge economic and social force. Players are demanding faster and easier games. This fundamental value shift is currently changing the form gaming takes across the country. Gaming is legal in one form or another in every state (including the District of Columbia) except Utah and Hawaii. Land based casino gaming (including casinos on Indian Reservations) is of- fered in 20 states. In addition, Indian tribes in Florida and New Mexico operate electronic games such as video poker without compacts because the states have refused to negoti- ate with the tribes. Excursion boat (riverboat gaming) is legal in Illinois, Indiana, Iowa, Louisiana, Missouri, and Mississippi. Every other state with a major waterway, or l4a lake is considering riverboat gaming. 38 states (including Washington D.C.) permit lotteries and remaining jurisdic- tions where gaming is legal offer various forms of pari- mutuel wagering. l5a . ’ , ei" Sectio =venue Analysi Industry Segment * s, e4s a ‘ 7 } ‘ . ~ A A en : 5 ha ds i. Baby Gaming “% » &j5 aly wes ; ~ ee Pm * be< ~3e = rs ~~ =f ~~" K° <¢ > =e; . , . a*3 - a ee . + + —- "+ en a ee ee ee ee ree - l6a REVENUE ANALYSIS BY GAMING INDUSTRY SEGMENT 1992 gaming revenues or win exceeded $29.9 billion a volume that would rank 19th in the Forbes Sales 500, ahead of American Express ($26.96 billion) and behind Boeing ($30.184 billion). Lotteries and casinos dominate the US legal gaming industry accounting for approximately 38% and 34% respectively, of total 1992 gaming revenues. Pari- mutuels are next in revenue market share at approximately 12%. Indian Reservation gaming accounts for 5% of revenue market share. Charitable games, bingo, card rooms, and legal bookmaking account for the remaining 11% of market share (see exhibit B). Consumer preference for higher priced lottery games, continued interest in OTB and slot machines over lower priced altermatives such as race tracks and table games changed the composition of gross gaming revenue. This also increased the average consumer price of gaming from 8.77% of handle in 1991 to 9.07%. Gross gaming revenue comprised .592% of US personal income versus .552% in 1991. Consumer expenditures (losses) on legal gaming were 6 times greater than the $4.9 billion Americans spent on box office receipts. Indian Reservation Gaming Class III Indian Reservation gaming experienced signifi- cant growth in revenues. Revenues totaled $1.07 billion, with an estimated (256%) or $769 million increase since 1991. When combined with Class II revenues, mostly bingo, the gross gaming revenue totaled $1.5 billion producing an overall gain in revenues of 108%, or $779 million. Exhibit C clearly illustrates the growth in Indian gaming since the passage of the Indian Gaming Regulatory Act (IGRA) in 1988. Although Indian gaming revenues are increasing at a tremendous pace, Indian gaming revenues are still a small 17a percentage of total gaming revenues. Exhibits A & B illus- trate market shares for 1991 and 1992. Exhibit D clearly shows that the size of Indian gaming revenues is still small as compared to total gaming revenues (comprising 5% of total revenues). There has been some confusion about the actual scale of Indian Gaming. A widely talked about figure of $6 billion was publicized. “Gaming and Wagering Business” magazine attributes this projection to a possible misunderstanding regarding gambling terminology. Indian casinos win 18% of drop. Therefore, a $6 billion drop would equate to a $1.08 billion win which is in line with the original estimate. Casinos Casinos won $11.2 billion an increase of $1.1 billion since 1991. Class III Indian Gaming the majority which is gener- ated by casino games comprised $1.1 billion of the total casino revenues. However, lotteries still comprised the larg- est share (38.3%) of the pie but not by a significant amount. Slot machines in Nevada and New Jersey, cruise ships, riverboats and land based casinos were all strong performers. The tend in the mix of casino gaming is moving away from table games to higher margin slot machines. Slot machines represented 47% of total Nevada and New Jersey casino gaming revenues in 1982 versus 65% or $5.83 billion in 1992. a ee ee eo ee 18a Lotteries There have been many changes in the lottery market. It is now comprised of three primary venues: traditional state number games, instant games, and video lottery terminals. Since its reintroduction into the US in 1964, the state lottery has been the engine that has powered the resurgence of legal gaming: ¢ 38 states including Washington DC permit state lotteries. ¢ Lotteries are available to more than 80% of the US population. ¢ Thus far, lotteries have been economically successful and relatively free of scandal popularizing and sani- tizing the game in general. Aggregate gross revenues from lotteries reached $11.5 bil- lion, a record 12% increase, a $1.2 billion increase from 1991. Texas, Georgia, and Nebraska began lotteries in 1992-3. The successful start of lottery operation in Texas generated a first year handle which topped $1 billion. The traditional lottery market is approaching maturity. Lotteries are diversifying their product lines. The continued success is highly dependent upon aggressively marketing lottery games and stimulating the market by diversifying their product lines. Video poker and keno will play a key role in the future of lotteries. Video lottery revenues were up 99% or $120.4 mil- lion in 1992. Non-Bingo charitable games Non-bingo charitable games include pulltabs, punch- boards, raffles, low-stakes blackjack and other card and dice 19a games. Gross revenues increased by 4.5% or $55.6 million to a total of $1.3 billion. Bingo Gross revenues from non-Indian bingo halls increased 2.2% to $1.09 billion. This revenue figure is an estimated figure based on the reported revenues. Each state has different laws regarding the reporting requirements and therefore it is probable that there are instances where revenues have not been reported. Industry experts believe this market has matured. How- ever, bingo players stay extremely loyal to their game. Pari-Mutuels Pari-mutuel wagering is generally considered to include on-track, off-track, and inter-track betting on horse racing, dog racing and Jai-alai. Currently, some form of pari-mutuel wagering is authorized in all the U.S. states except Alaska, Georgia, Hawaii, North Carolina, South Carolina, Utah, and the District of Columbia. All of the states with pari- mutuel wagering have some form of horse racing, approxi- mately 17 states have greyhound racing, and Jai-alai wager- ing is in operation in just three states, Florida, Rhode Island and Connecticut. Pari-mutuel wagering accounted for 12% of total US gaming revenues in 1992. Gross pari-mutuel revenue rose slightly (.4%) by $16.1 million to $3.7 billion. Major innovations in the industry have been off-track betting, inter track betting and simulcasting races to other venues, such as casinos. Off-track horse revenues increased by 12.8% to $110.2 M. Off-track betting comprises 33% of the industry’s revenues and the share continues to rise. These innovations have made pari-mutuel wagering more accessible to bettors, however several studies have shown that the main effect has been to increase the amount wagered by existing patrons versus attracting new attendees. 20a The pari-mutuel industry has been losing its share to other gaming industry segments and experienced low growth in total revenues from 1982-1992 (exhibit E). The pari-mutuel industry will require new and creative marketing approaches to hold their share of the market. Non-Nevada Cardrooms Cardroom revenues increased slightly in 1992, by less than $1.7 million, to $661 million. Most of these operations are small but there are many. There are approximately 300 in California alone. However, revenues in those California cardrooms have stabilized in 1992. Poker-like versions of pai-gow and super pan-nine and similar games are the major attractions. Legal Bookmaking This market share appears to have matured. Sports bets net $9.98 million in 1992 to a three year low of $97.4 on. —_— ~, —_——— ee oe — 2) ae € 7 . a of Indian 2la ‘Gaming 22a HISTORICAL REVIEW OF INDIAN GAMING Introduction American Indian Nations embrace a distinct culture, language and spirit. Casino gaming has been referred to many as the “return of the buffalo”. The buffalo was used by the American Indian people for total subsistence, food, shelter, clothing, children’s games, and trading. Gaming has replaced the buffalo as the mechanism used by American Indian people for survival. Today, the proceeds from gaming are used by Indian Nations for subsistence, cultural preservation, and to replenish impoverished econo- mies. Not surprisingly, the spread of Indian Gaming has spurred controversy. As Indian casinos became more suc- cessful, competitors have lodged charges of unfair advan- tages and organized crime infiltration. During a 1992 Senate hearing on Indian Gaming, Paul Maloney, senior counsel! at the Department of Justice, testified that a special investiga- tion uncovered no evidence of organized crime infiltrating Indian gaming. In all cases of crime or robbery, Tribal governments have brought the crime to justice. Opponents accuse Indians of exploitation; that they are using gaming as a means to provide short-term financial growth and enor- mous benefits. Proponents refer to the intent of IGRA when allegations of exploitation are raised. The primary intent of IGRA is to “provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self sufficiency, and strong tribal governments”. Under IGRA, all revenues from gaming operations are required to be used solely for governmental or charitable purposes. Gaming revenues are used to build infrastructure, schools, hospitals, roads, sewers, and water systems and to fund health care and education. Many reservations do not have sufficient resources and are located in undesirable regions that cannot support devel- 23a opment. These tribes have become dependent on federal aid, as attempts at economic development have failed prior to the advent of Indian gaming. Government aid provided to Indians often result in bene- fiting local communities. This is due to the fact that there is a scarcity of Indian businesses and high unemployment, sometimes as high as 80%. A significant portion of the federal dollars are therefore spent outside the reservation. The lack of a vital economy on reservations makes it nearly impossible to improve tribal conditions. This hopeless environment and constant struggle help to explain the high incidence of alcoholism and suicide, and the lack of ade- quate health care.in many tribal communities. According to the 1990 Census, the poorest counties in the United States are located on Indian Reservations. There are also 3,200 counties in the United States. Of the Poorest 1% (32 counties), 7 are located on Sioux reservations in South and North Dakota. In addition, several other Indian Reserva- tions in various counties in the United States were also listed amongst the 32 poorest counties. More recently, gaming has enabled a few tribes to im- prove their situations considerably. The profits are used to build road and water systems and healthcare centers, pro- vide job training scholarships and both home and business loans to tribal members. More tribes will benefit from gaming with the proliferation of Indian gaming operations. Currently, there are 547 tribes of which only 79 (14.4%) have Class III gaming. Legislative and Regulatory Issues Indian Tribes are sovereign governments. They have ex- isted as sovereign governments long before Europeans set- tled in North America. Treaties signed with settlers in exchange for land guaranteed the tribes continued ability to be recognized and treated as sovereign entities. However, 24a historically state governments have been hostile in recogniz- ing Indian Tribes as independent entities. Under the constitution of the United States, the federal government is obliged to protect tribes from states, who have often coveted the Indian’s lands and assets, and sought to impose power over Indian tribes and people. Several landmark court cases have confirmed this recog- nition of Indian sovereignty. These court cases include, Cherokee vs. Georgia, 1831, and California v. Cabazon, 1987. The Indian Gaming Regulatory Act (IGRA), passed by Congress in 1988, affirms that tribes have the power to conduct gaming on Indian lands subject to tribal/state jurisdiction. Indian Gaming was conducted on many reservations throughout the US prior to the passage of Indian Gaming Regulatory Act (IGRA). This legislation was passed in respo%¢ to a 1987 federal court decision “California versus Cabazon” which stated that tribes could engage in forms of gambling that were not expressly prohibited by the state in which the tribe is located. The “California versus Cabazon” case and US supreme court finalized the distinction in which the court applied a criminal/prohibitory — civil/regulatory distinction. In other words, if a state regu- lates gaming, in any form, then gaming falls under civil law for which Indian nations cannot be prosecuted and the state is obligated under federal law to enter into compact negotia- tions with the tribe. If a form of gambling sought by a tribe is expressly prohibited by the state under criminal law, then the state can refuse negotiations for particular games on that basis. The Cabazon case solidified issues surrounding gam- ing on tribal lands which had previously been questioned. The purpose of IGRA was to create a balance between the tribe’s right to conduct gaming on their reservations and the public interests of the states in which the tribes are 25a located. IGRA became effective on October 17, 1988. The goals of the act include tribal economic development, self- sufficiency and a strong tribal government. The act provides a framework by which the games are conducted to protect both the tribes and the state. The act created three classes of gaming and allocated regulatory jurisdiction over each class among tribal, federal, and state sovereigns. ¢ Class I — includes social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals and is subject to exclusive tribal regulatory jurisdiction. ¢ Class II — includes all forms of bingo and other games similar to bingo, such as pull-tabs and punch-boards (electronic or non-electronic), provided these are played in the same location as bingo games. Class II also refers to non-banking games that either expressly allowed or not expressly prohibited by state law and banking card games in existence in the specified states of Michigan, North Dakota, South Dakota, Montana, and Washington State on or before May 1, 1988. Class II gaming is subject to tribal regulatory jurisdic- tion, with extensive oversight by the National Indian Gaming Commission (NIGC). ¢ Class II] — includes all forms of gaming that are not Class I or II, including slots, casino games, banking card games, tiorse and dog racing, pari-mutuel wager- ing and jai-alai. Class III gaming is lawful on Indian lands only if the gaming has been authorized by a tribal ordinance approved by the chairperson of the NIGC and such gaming is permitted by the state for any purpose by any person, organization, or entity, and is conducted in conformance with a tribal-state compact entered into by the tribe and the state that is in effect. The tribal-state compact entered into by the tribe was proposed by the Nevada congressional delegation on 26a behalf of the states. The jurisdiction over class III gaming is left to the tribal-state compact negotiation. The sovereignty of American Indian tribes was limited by IGRA which required a tribe to negotiate a compact with the state. Under IGRA, a tribe must request a state to enter into compact negotiations. Once a request is made, the state has an obligation to negotiate in “good faith” to enter into a compact. The compact must also be approved by the Secre- tary of the Interior. Jurisdiction is provided to the federal district court concerning the following: . Any cause of action by a tribe arising from a state’s failure to conduct negotiations in good faith. ° An action by a state or a tribe to enjoin any class III activity conducted in violation of the compact. * Any cause of action initiated by the Secretary of the Interior to enforce the Secretary’s authority under IGRA to enforce mediation procedures. Today, there have been law suits because some states have failed to live up to IGRA and negotiate in “good faith” with tribes. There have been a number of landmark cases prompted by the proliferation of Indian Gaming. These cases have clarified gaming issues that IGRA addressed. Some of the major cases are summarized below: Mashantucket Pequot Tribe versus State of Connecticut, 199] This decision involved the first interpretation of IGRA. The tribe filed suit in accordance with IGRA requiring the state of Connecticut to negotiate terms for operating games of chance on its reservation. The state agreed that “its limited authorization of the conduct of Las Vegas nights by nonprofit organizations does not amount to a general allow- ance of such (casino-style) gaming as the tribe would institute, and further that such gaming activity is contrary to 27a the State’s public policy.” The court determined that the issue was whether the form of gaming sought by the tribe violated the State’s public policy. The court reiterated what was stated in the Cabazon case. “If the intent of state law is generally to prohibit certain conduct, it falls within the areas of criminal jurisdiction, but if the state law generally permits the conduct at issue, subject to regulation, it must be classified as civil/ regulatory.” The court reasoned that since the state permits certain casino style games at charity events, the Mashantuckets use was within the meaning of IGRA, and not against public policy of the state. The court held that the state was required to enter into a compact with the Pequot tribe and that the games conducted in Las Vegas nights were subject to negotiations as were the rules of conduct for these games. Lac Du Flambeau Band of Lake Superior Chippewa Indians Versus Wisconsin, 1991 In this case the tribe filed suit against the state under IGRA because the state failed to negotiate in good faith for a gaming compact. The court concluded that “the state is required to negotiate with the plaintiffs over the inclusion in a tribal state compact of any activity that includes the clement of prize, chance, and consideration and that is not prohibited expressly by the Wisconsin Constitution. The State is required to negotiate casino games such as video, slot machines, and blackjack with the tribes because the activities are permitted under Wisconsin law within the meaning of IGRA.” The Cabazon case finalized the legal distinction between criminal/prohibitory and civil/regulatory. In this case it was determined that Wisconsin’s gaming structure was regula- tory in nature. The central issue in this case was whether the state “expressly permits” the type of gaming which the tribe 28a was secking to conduct. The Federal court said that the “inquiry” is whether Wisconsin prohibits those particular gaming activities. It does not.” Seminole Tribe of Florida vs. Lawton Chiles, Governor of the State of Florida, 1994 This case was first filed in the Southern District of Florida on September 19, 1991. The Seminole Tribe brought suit against Lawton Chiles, Governor of Florida, to remediate the alleged failure of the State of Florida to conduct good faith negotiations for the tribe to establish gaming opera- tions on their land. The State of Florida dismissed the claims on two grounds, 1) Gaming activities proposed by the Seminole Tribe are not conducted in the State of Florida. 2) Pursuant to the Eleventh Amendment, Congress does not have the constitutional power to enforce “good faith” requirement of the compact process by explicitly providing the Tribe a judicial remedy against the state. On June 18, 1992, the final ruling sided with the Seminole tribe. The Florida Federal Judge ruled that the Eleventh Amendment was not a justifiable defense by the states. The Tribe’s central argument against Florida’s rebuttal was that IGRA abrogated the State’s immunity when it enacted IGRA. This ruling was important in that it found that Congress has the power to abrogate State immunity. Subse- quently, interlocutory appeal ensued. The appeal resulted in a finding that Congress did not have the power to abrogate state immunity, but the tribes should have remedy in “bad faith” cases. Therefore, the Secretary of the Interior was directed to implement procedures for the tribes in lieu of a compact with the states. The State's Use of the 10th and 11th Amendments Congress included a provision in IGRA that the states and tribes negotiate a compact for those games being 29a considered by the tribe. The states have responded to IGRA by using the 10th and 11th amendments to block the establishment of Indian Gaming Facilities. The state’s basic Strategy is to refuse to negotiate all or certain kinds of Class III games (such as slot machines, card games, pari- mutuel racing etc.). If a tribe feels the state has failed to negotiate in good faith, IGRA says that the tribe can sue the state for failure to negotiate. The states have been using the 10th amendment as a defense because it reads the powers not delegated to the federal government by the constitution are reserved for individual state governments. The state therefore cannot be compelled by the federal government to act on anything that is not stated in the constitution. This is disputed by the tribes. States have been using the 11th amendment as a defense when tribes file suit against them for allegedly negotiating in bad faith. The 11th amendment says that a state cannot be sued by individuals based on federal legislation, that a state has immunity from such lawsuits unless congress makes it clear that immunity does not apply. One response according to Jerry Strauss, an attorney representative for several tribes is “Congress has the power to abrogate state immunity and nobody disputes that Congress intended to do that when writing IGRA.” When the tribe seeks an appeal by taking the state to court the state dismisses the suit on the grounds of sovereign immunity as defined in the 11th amendment. The amend- ment bars suit by individuals against a state to enforce rights conferred by federal legislation, in the absence of clear congressional intent to authorize such suits. 30a Recent Agreements In 1993, the Mashantucket Pequots tribe agreed to pay the state of Connecticut 25% of slot machine revenue in return for a monopoly on slots. On April 25, 1994 Governor Weicker Jr. settled the Mohegan’s land claims in exchange for permission to oper- ate a casino. In this new agreement, the Pequots and the Mohegans will share the gaming business. The new compact extends to all casino games in return for $160 million in payments from the tribes. This agreement could be dis- solved if the legislature legalizes not just slot machines, but any gambling off the reservation. If the agreement is dis- solved the state would be forfeiting the tribes’ millions. This agreement raised the barrier to any gaming company other than Indians to operate casinos in Connecticut. 3la on D & e« . o i ’ a) tu. f be ft oe - 32a REVIEW OF ECONOMIC IMPACT STUDIES Introduction There have been several studies which show the positive effects of Indian Gaming on reservations and the economy. The Indian Casinos stimulate economic growth due to direct and indirect impacts. For example, direct impacts are the wages paid to employees as well as the purchases from suppliers. For purposes of illustration, let us review the economic impact of the wages paid to employees of the casino. The casino employees have the means to consume and they will therefore spend a portion of their payroll on goods and services both on and off the reservation. The producers of these goods now have extra incomes and they will in turn spend a portion of their income. This process will continue. Thus an endless chain of secondary consumption and respending is set in motion by the primary investment (in this example the casino employees’ wages.) This is what is referred to as the multiplier effect. Spending stimulates additional or induced spending in addition to employment. There are other positive economic effects such as decrease in unemployment and public assistance expenditures. Although different methodologies have been used there are a number of common findings which are revealed in a majority of the studies: * Increases in tribal revenues to support Indian govern- ment services, economic development, and self- sufficiency * Increases in employment (Indian and non-Indian) * Reduction in public assistance expenditures * Creation of induced spending and induced employment ¢ Increases in the number of out-of-state visitors which stimulates visitor spending ¢ Increases in tax revenues 33a ¢ Decrease in crime rates. These studies also prove that the Gaming operations not only benefit the Indian community but the surrounding regions as well. As will be explained in several of the studies, more often than not the casinos employ a higher percentage of Non-Indian employees. An estimated 78% of casino gaming employees are non-Indians. The following studies have been reviewed and the key findings will be highlighted in this report: ¢ The Economic Impact of Sycuan Gaming Center on East San Diego County — prepared by McGladrey & Pullen CPA’s and Consultants * Economic Benefits of Tribal Gaming in Minnesota — prepared by KPMG Peat Marwick * The Economic and Fiscal Impact of American Indian Gaming on the Government of the State of Wiscon- sin — prepared by James Murray, Ph.D. * The Economic and Fiscal Impact of Indian Reserva- tion Gaming in New Mexico — prepared by Center for Applied Research * The Economic and Social Effects of Indian-Owned Gaming Enterprises in Michigan — prepared by Uni- versity Associates * The Economic Impacts of Foxwoods High Stakes Bingo & Casino on New London County and surround- ing areas — prepared by Arthur Wright and Associates Key Findings The Economic Impact of the Sycuan Gaming Center on East San Diego County Although there has been a recession in San Diego County, the Sycuan Gaming Center has experienced tre- 34a mendous growth. It has impacted the local economy by creating more than 2,100 jobs in 1993 and generated total spending of nearly $70 Million. The population of the Sycuan is only 100 people. The tribe has operated a gaming operation since 1983 starting with bingo, then adding card games, OTB and video pull tab machines. In 1990 a 67,000 square foot Las Vegas style casino was built for $3.5 million and then expanded in 1992 for $500 thousand. There have been positive benefits to the tribe such as no reliance on public assistance for the last six years. The tribe has improved the infrastructure and also invested in non- gaming related ventures to gain long-term economic self- sufficiency. Proceeds from the gaming center have funded the following tribal operations: * Medical and dental clinic for tribal members and all employees including Non-Indians ¢ Pharmacy * Day Care Center ¢ Chapel * Ambulance Service ¢ Library * Police department ¢ Fire Department * Automotive Shop * Human Resources department Tribal administrative offices Gaming revenues have continued to increase significantly. Gaming revenues include revenues from bingo, pull tabs, card games, off-track betting, and restaurant and conces- sions. In 1990, the expansion of the facility allowed for the inclusion of card games, which is the largest source of 35a gaming revenues (53.3% of total revenues). Total gaming revenues increased 28% from $34.0 million in 1992 to an estimated $43.6 million in 1993. The largest expenditures for the gaming operation are operating expenses which totaled $22.1 million in 1993 and the payroll and payroll taxes which totaled $9.7 million in 1993. Other capital expenditures related to the gaming center totaled $2.2 million. Total expenditures in 1993 were $34.0 million. The revenues less the total expenditures totaled $5.4 million in 1992 and $9.6 million in 1993. These amounts are referred to as “Proceeds” and IGRA requires that proceeds be used for the general welfare of tribal members, promoting economic development, funding tribal government and local charitable donations. The following table summarizes the tribes use of proceeds: Use of Proceeds 1992 1993 Tribal Government $ 651,000 $1,089,000 Education and Human Services 3,048,000 3,153,000 Per Capita and Direct Services 804,000 930,000 Capital expenses and investments 929,000 4,428,000 Total $5,432,000 $9,600,000 According to the San Diego Business Journal, the Sycuan Band is the second largest employer in East San Diego County with 851 employees in 1993. It is interesting to note that 90% of those employed by the Gaming Center and tribal operation are non-Indian. The economic impact from the Sycuan Gaming Center and Tribal Operations was $38.6 million for direct expendi- tures and $31.3 million for induced expenditures resulting in a total economic impact of $69.9 million. 36a Economic Benefits of Tribal Gaming in Minnesota The state of Minnesota entered into video games of chance compacts with 11 tribes between October 20, 1989 and the spring of 1991. The state also entered into blackjack compacts with 11 tribes between May and August of 1991. Tribal gaming has resulted in an estimated total of 27,575 jobs from both direct and induced employment. Of this total 9,975 persons are employed directly by the tribal gaming facility. Indians and non-Indians benefit from the gaming facility. Indians hold 27% of the jobs and non-Indians hold 73% of the new jobs. The tribal gaming employment was compared to other employers and it ranked as one of the largest employers in Minnesota. According to a study con- ducted by the Minnesota Planning Agency 20,000 indirect employment jobs are being supported by tribal gaming and 7,600 could be supported by tourism expenditures. The state has also reduced Public Assistance spending. The number of Aid to Families with Dependent Children (AFDC) recipients has decreased by 14% between 1987 and 1992 in 8 non-urban counties with tribal gaming whereas the statewide number of recipients increased 17% for the same period. Gaming revenues increased 173% from 1991 to 1992 totaling $390 million. Video games comprised the largest share (74.7%) of total revenues. 37a The largest expenditures were payroll totaling $116.9 million and operations-related totaling $106 million. The revenue less the operating expenses yielded available pro- ceeds of $167 million. In accordance with IGRA the tribe utilized proceeds as summarized below. Use of Proceeds 1992 Direct services $39.5 million Human services and education 4 million Charitable contributions 8 million General Gov. and trusts 13.4 million Management fees 8.3 million Capital expenditure enterprise 32 million Capital expenditure infrastructure 6.5 million Housing 17.3 million Investments and unallocated 45.2 million Total $167 million ————_— The Economic Impact of American Indian Gaming on the Government of the State of Wisconsin There are currently 15 Class III gaming facilities owned by American Indian tribes in the State of Wisconsin. This study released in 1993 showed the dramatic benefits that Indian Gaming has had on the state of Wisconsin. The benefits to the state of Wisconsin from welfare savings, gas taxes, income taxes and sales taxes were estimated at $51.7 million. These savings are summarized as follows: Savings 1992 Welfare Savings $2.2 million Gas Taxes $14.2 million Sales Taxes $17.3 million Income Taxes $18 million Total $51.7 million 38a These estimates were derived by reviewing current em- ployment data and historical welfare and unemployment statistics. An estimated 30,000 jobs are directly or indirectly supported by Indian Gaming Facilities. Of this total, 4,500 persons were employed directly by the gaming facility. Approximately, 5,500 jobs were created in construction, supplier firms, and from non-gaming visitor spending. The remaining 20,000 jobs were indirectly supported by the gaming facilities. The estimated tax liability as highlighted above is $18 million. The study also reviewed the reduction in welfare benefit costs resulting from the employment of former welfare recipients by the gaming facilities. A survey of employees of the American Indian gaming facilities revealed that 820 of those employed in 1992 had been welfare recipients prior to joining the operation. Using the average payments it was estimated that a total of $1.6 million in payments was saved by the state and approximately $1.4 million was saved by the federal government. There were also approximately 205 Indians receiving Relief for Needy Indian Person (RNIP) benefits prior to joining the gaming operation. The average RNIP benefit in 1992 was $2,676 resulting in a total savings of $548,580 in this program because of direct gaming employment. As stated in the table above, there was also significant tax revenue generated from sales associated with the operation of the gaming facility. Total sales tax and gas tax collections from sales associated with facility exceeded $32 million in 1992. This study also reviewed crime rates and found that crime rates were actually lower in those communities with gaming facilities. The total number of offenses in rural counties increased by approximately 11 percent, the increase in casino counties was less than 5% while the increase in non- 39a casino rural counties was over 12%. These statistics do not support the contention that costs are being incurred in casino counties due to higher crime rates associated with Indian gaming facilities. Moreover, this does not reflect the thousands of enforcement hours provided at no federal or state costs by the tribally funded officers and departments. The Economic and Fiscal Impact of Indian Reservation Gaming in New Mexico This study reviewed the operations of 10 tribes which comprise all Indian gaming enterprises in New Mexico. The study focused on three dimensions to determine the economic impact of gaming. * The wage and salary income of employees at all reser- vation gaming enterprises was identified. A portion (60%) of the wage and salary income of gaming opera- tion employee was assumed to be expended in the state economy. * The value of expenditures that are made by tribal gaming operations for supplies, utilities, equipment, etc. was identified. ¢ The tourism expenditures related to gaming were also determined. The tourism expenditure patterns were primarily based on the All Indian Pueblo Council Report, “The Economic and Fiscal Impact of Ameri- can Indian Reservations in New Mexico.” (October 10, 1993) The principal source of data was a tribe by tribe survey which described number of jobs, salary payments, etc. Economic and taxation assumptions were taken from eco- nomic models developed for the All Indian Pueblo Council by the Center for Applied Research. 40a Economic Impact attributed to Indian Gaming Operation Employees The Indian Reservation gaming operation directly sup- ports 597 jobs and accounts for induced employment of 176 job holders state wide. This results in a total salary and wage income impact of $6.9 million. Economic Impacts attributed to Tribal Government Expenditures The expenditures for gaming operations supplies, goods and services created 879 jobs state-wide and $20.1 million in wage and salary income. Economic Impacts of tourism attributed to Indian Reservation Gaming The tourist expenditures account of 3,332 jobs and $65.6 million salary and wage income statewide. The following table summarizes the economic impacts discussed above: Basis of Impact Amount Total Income - Gaming Operation Employees $ 6,935,509 Total Income - Expenditures for Operations $20,149,451 Total Income - Tourism Expenditures $38,530,608 Total 615, $65,615,568 Fiscal Impacts of Indian Gaming The key assumption forming the basis for tribal govern- ment expenditures is that gaming enterprises obtain at least 90% of the goods, services and supplies for their operations in state. The gaming operations are directly and indirectly contributing $1.4 million in tax revenue. 4la The Economic Impact of Michigan's Indian Gaming Enterprises This study compiled information from all seven Michigan tribes. There are eight separate gaming enterprises which include casino and bingo operations. Some of the tribes operate businesses to serve customers including restaurants, hotels, and gift shops. In August 1993, a total of 2,681 people were employed by Michigan gaming facilities. Of these 52% were Native Americans and 48% were non-Indians. Of those employed 49% were welfare recipients and 44% were unemployed prior to joining the gaming facility operations. All of the facilities rank among the top eight employers in their respective counties. Employment of tribal members has substantially increased. On average, tribal unemployment rates decreased 77% as a result of the availability of on reservation employment. The economic benefits were quite significant. The eight tribes paid a total of $5.7 million in state and federal taxes. The seven tribes reported total revenues of $70.7 million. Gaming payrolls totaled $19.7 million in 1992. The gaming enterprises spent a total of $14.5 million on goods and services. These facilities continue to flourish as evidenced by the growth from 1992 to 1993 in several key areas. The number of employees has increased by 40%, taxes paid increased by 5%, total receipts increased by 70%, payroll increased by 46% and expenditures on goods and services increased by 84%. The Economic Impacts of the Foxwoods High Stakes Bingo and Casino on New London County and Surrounding Areas This study focused on 3 economic impacts of the Foxwoods High Stakes Bingo and Casino, Employment and earnings, AFDC impact, and Real value of housing. 42a I. Employment and earnings summary The Foxwoods High Stakes Bingo and Casino, owned by the Mashantucket Pequot Tribe, opened in early 1992. This opening created 6,000 new jobs and is expected to increase to 9,500 in 1994. The average gross pay of casino employees is approximately $25,000 a year plus $9,300 for fringe benefits. The salaries for casino employees are on average, $2,100 more than average New London County salaries before February 1992. Due to increased economic activity, new indirect (non-casino) jobs will also be created. Apply- ing economic impact analysis, the study showed that each new Foxwoods job, supported 1,107 additional non-casino jobs in New London County. Therefore, the combined effect of the 9,500 jobs is a total of 20.017 new jobs. The total associated payroll is estimated to be $478.5 million per year. This analysis also determined that each new Foxwoods job, supported 0.74 additional non-casino jobs in the rest of Connecticut. This translates into more than 7,000 new jobs, with an annual payroll of more than $214 million. Overall. employment created by the opening of the Foxwoods High Stakes Bingo and Casino have a significant correlation to creating jobs in all of Connecticut. II. AFDC Impact Using economic methods, this study determined that each new job trims 0.154-0.26 recipients from AFDC (Aid for Dependent Children) rolls. The correlation was also deter- mined that when the economy is more robust, these figures increase. When the economy is more depressed, these figures tend to drop. To estimate the total savings from the drop in recipients who receive AFDC, it was assumed that a conservative AFDC payment is $200 per month and 26,000 direct and indirect jobs will be created. The total estimated Savings would range from $9.61 million to $16.20 million, based on 43a an estimated reduction in AFDC recipients of 4,004-6,700 people. Ill. Real Value of Housing: Also applying econometric analysis, estimated that over the long run, every | percentage point reduction in unem- ployment rate in the four eastern most Labor Market Areas (LMA’s) in Connecticut will increase better than 7.7 per- cent in real housing prices in the 4 LMA’s. Converting casino-related employment projections into decline in un- employment rates, it is estimated that real housing prices in the 4 LMA’s will increase by $1.177 billion by late 1994. In addition, including the effects of non-casino related employ- ment, the total increase in real housing prices is estimated to be $6.1 billions by the end of this decade. = —- —- SO (ert r $ ection ee | y * ~~ +. @ J xs . 6 i} sag twee ccm « 46a 45a CBS) wemseng Basten me Bawen sarc %*ret sourses %8t s@veNC) %I Bunewrxoog %Z Wooy ped SIN -UeY 4 “ry obuig | SOWED OQRWFUD SUOQE VESEY UBIPL] /#)0) 7661 - Aujsnpauy Ag sasej}uad19g sanuaAsy SUIMIBS) SF [BIO] I 8 LISIHXS | COS) Peererg Gasden, me beur sores %Pt sourses %BC $@UaC} %i> Suneunoog %P Woo ped %S burg sOWeS e/QQQWUeUD sNWveW %C SUOQE VESEY UPIDU) |#)0) 1661 - Aujsnpuy Ag sadejua019g sanudaady SuIMey Gf [BIO] V LISIHX3 | 48a 47a TOG) 204 S1QEWEAe 8) Buyweo Ve ypuy 10; FLep ON BION , 766) $06) 7861 W 000 LzS W ice ers 7661 PUL CRG ‘Z86I Wrirois Senversy Guwen sf fio) s Sanvuarsy Burwed veipu; B puebe 7 JF 000 000 000 Ss + 000000 0000:$8 + 000000 000 Sis + 000000000 ozs r 000 000 000 $75 000 000 000 OTS SaNUsAdy SUIMLy UvIpUy ‘sa SuIME C4 [BIO] I Q LIGIHX3 | sROA 0664 686) e061 <6) 9 LISIHXS | Z661-S86T SONUIADY [BO] UF pussy SUIMIeS) ULIpUy] 50a 49a Ces. weerwng Basten, ma bewen sarcs vt * — — 2 2. a. < (PORTE JON FEM VOUs Vesey UF)PLy 204 SONVOAS [96 OE NEDEG Poen em FeP Ferg SPE) . SINUIAIY |B}0 | 3 LIGIHX3 | - ELEEES vi | 008 C661-786T L suimesy ¢"f Jo dsUbq) JUIII9g Zz MAGA Minnesota Lndian Gaming Association Economic Benefits of Tribal Gaming in Minnesota 7992 Z MIGA Minnesota Indian Gaming Association April 30, 1993 Economic Benefits of Tribal Gaming in Minnesota 1992 The Minnesota Indian Gaming Association (MIGA) is picascd to present this second authorized Study of the economic benefits of Tribal gaming in Minnesota. The federal Indian Gaming Regula- tory Act of 1988 provided a statutory foundation for Tribal gaming “as a means of promoting economic development, sclf-sufficiency and strong Tribal government.” This Study was undertaken to assess the continuing economic impact of Tribal gaming in Minnesota. Authonzcd by MIGA, the Study presents data gathered from nine of the eleven Minncsota Indian Tribes operating gaming casinos. The data identify economic bencfits from Tribal gaming in the areas of : * Increased Tribal revenucs to support Indian government services, economic development and self-sufficiency; * Increased jobs and employment; * Reduced public assistance expenditures; * Increased jobs from secondary Spending and construction; and * Increased out-of-state visitor Spending in Minnesota. The study concludes that Tribal gaming in Minncsota is well on its way to becoming one of the Statc's largest employers. As this industry conunucs to develop, other benefits associated with eco- nomic progress will be studied. Visible progress is already occurring on Minnesota's Indian reservations in community development, education, health care, nutrition, housing and infrastruc- ture improvements. This study confirms thai non-Indian sectors of Minnesota's cconomy are enjoying sufficient benefits as well. Tribal gaming occupies a unique niche in the fabric of our society. Unlike other industries. it is operaicd by sovercign governments to finance Programs and services for its citizens, to build eco- nomic self-sufficiency on Indian reservations, and to create economic opportunity for Indians and non-Indians alike. In this context, it is clear that Tribal gaming in Minncsola 1s achieving the objec- Contacts tives set forth by the U.S. Congress. Sincerely, Report issucd by : Technical assistance by: Wounan Ellis. Minnesota Indian KPMG Peat Marwick Chairman. MIGA Gaming Association Minncapolis, Minnesota Myron Ellis, Chairman Steven W. Laible, Partner 218-335-8200 612-337-9494 54a Table of Contents EXECUTIVE SUMMARY STUDY BACKGROUND AND APPROACH GAMING OPERATIONS: FISCAL DATA EMPLOYMENT TRENDS PUBLIC ASSISTANCE TRENDS INDIRECT EMPLOYMENT OUT-OF-STATE VISITORS 55a EXECUTIVE SUMMARY Study Participants The Minnesota Indian Gaming Association (MIGA) has authorized a study of the economic benefits of Tribal gam- ing in Minnesota. A professional service firm, KPMG Peat Marwick, provided the technical support and analysis to conduct the study. The following nine MIGA members participated in the study: * Bois Forte Chippewa ¢ Mille Lacs Chippewa ¢ Fond du Lac Chippewa ¢ Prairie Island Sioux ¢ Grand Portage Chippewa ~» Shakopee Sioux * Leech Lake Chippewa ¢ Upper Sioux * Lower Sioux Fiscal years are not the same for each Tribe. Some use June 30 and others use September 30 or December 31 as the end of the fiscal reporting period. Results from the study identified several significant eco- nomic benefits. Gaming Proceeds During fiscal years 1991 and 1992, the gaming operations of the nine study participants produced the following finan- cial results: 1992 1991 Revenues after payouts $390 million 143 million Less expenditures 223 million 89 million Available proceeds $167 million 54 million The gaming expenditures are benefiting employees and a variety of suppliers and service providers. The proceeds from gaming are being used for purposes consistent with the 56a National Indian Gaming Regulatory Act of 1988 to: ¢ Fund tribal government; ¢ Provide for the general welfare of the Tribe; * Promote economic development; ¢ Contribute to charity; and * Help fund local agency operations. Proceeds are being used for direct human services, educa- tion, housing and infrastructure improvements as well as for investment in the Tribal business enterprises. Job Creation and Employment Tribal gaming has resulted in 9,975 new jobs in Minne- sota for persons working directly for the Tribal gaming enterprises. Indians hold approximately 27% of the new jobs and non-Indians have benefited from 73% of the new jobs. A majority of the jobs have been created in the non-urban areas of the state where steady jobs on an annual basis are in short supply. If these jobs were attributed to a single employer, Tribal gaming would be one of the 10 largest employers in Minnesota. Public Assistance Savings An analysis of gaming operations in non-urban counties shows a strong correlation between an increase in jobs in the non-urban counties with Tribal gaming facilities and a decrease in AFDC recipients. The number of AFDC recipi- ents decreased by 14% between 1987 and 1992 in the eight non-urban counties with Tribal gaming facilities while the state-wide number of recipients increased 17% for the same period. This produces a benefit to the state in the form of reduced spending for public assistance. 57a Indirect Employment A study prepared by the Minnesota Planning Agency estimates an additional 20,000 indirect employment jobs are being supported by Tribal gaming. Out-of-State Visitor Spending It is estimated by the Minnesota Planning Agency that out-of-state visitors spent $245 million on various travel related goods and services in fiscal year 1992. This level of spending could support an estimated 7,600 jobs. Job Summary The following is a summary of the total number of jobs that could be supported by Tribal gaming based on the methodology used in the study. Source of jobs 1992 1991 Direct 9,975 4,730 Indirect estimate 20,000 5,300 Visitor spending estimate 7,600 600 Total 37,575 10,630 Other Benefits There are likely additional benefits from Tribal gaming that have not been quantified due to a lack of data including: Increased payroll tax revenues; Increased unemployment insurance revenues; increased sales tax revenue from visitor spending; Increased sales tax revenue from induced spending; Improved housing; Improved health care; Increased job skills; and Improved self-esteem from being employed. 58a STUDY BACKGROUND AND APPROACH Background The Minnesota Indian Gaming Association (MIGA) is an organization that includes members from each of the eleven Tribes in Minnesota. These communities are feder- ally recognized Tribes and each has an independent tribal government. MIGA has authorized a second study of the economic benefits of Tribal gaming in Minnesota. The professional service firm of KPMG Peat Marwick was engaged by the members to provide technical assistance and analysis with respect to the study elements. Exhibit | is a listing of the Indian Tribes and gaming facilities that participated in the study. Since some Tribes and gaming facilities did not participate, the aggregate data included in the study is less than the total Tribal gaming picture in Minnesota. Exhibit 1 PARTICIPATING MEMBERS Tribe Gaming Facility Bois Forte Fortune Bay Fond du Lac Fond du Luth and Big Bucks Grand Portage Grand Portage Casino Leech Lake Northern Lights and Palace Bingo Lower Sioux Jackpot Junction Mille Lacs Chippewa § Grand Casino Mille Lacs and Hinckley Prairie Island Sioux Treasure Island Shakopee Sioux Little Six and Mystic Lake Upper Sioux Firefly Creek 59a Approach Data was based on the 1992 fiscal year. Data collection forms were developed and included the following elements: * Revenue — Revenue data for each gaming facility was obtained directly from the facility. The term revenue in casino operations is generally defined as the win from gaming activities, that is, the difference between gam- ing wins and losses, not the total amount wagered. All reference to revenue in this study is after payouts and does not include the total amount wagered. * Source of Revenue — Revenue data has been classified by major source. The major classifications of Tribal gaming revenue in this study include: — Video games, — Blackjack, — Bingo and pull tabs, and — Concessions and other. * Operating Expenditures — Expenditure data was ob- tained from each gaming facility and classified into the following categories: — Salaries and wages, — Payroll taxes and benefits, — Advertising/ promotion, — Utilities, and — All other operating expenditures. * Use of Proceeds — Information was obtained on the use of proceeds made available from gaming activities. The major classifications for use of proceeds include: — Direct services and per capita payments to members, — Human services and education, — Charitable contributions, — Investments, 60a — Management fees, — Other tribal government trusts, — Enterprise facilities, — Public infrastructure, and — Housing. Other areas of economic analysis included the following: * Employment Trends — Data was obtained on the num- ber of jobs created by Tribal gaming including the direct jobs at the gaming facilities and the indirect jobs resulting from gaming expenditures. * Public Assistance Trends — Data was obtained on the numbers of persons receiving public assistance in Min- nesota to analyze any changes that might be related to the growth in gaming employment. Sources of Data Tribal gaming is a relatively new business activity in Minnesota and data sources are in a developmental stage. Fiscal data related to gaming operations was obtained from internal reports prepared by the accounting and administra- tive staffs of the participating MIGA members. The staff personnel have attempted to answer all inquiries essential to conducting the study and have made reasonable efforts to present accurate data. The fiscal data was not independently verified to other documents. It is possible that the data presented includes inconsistencies in classification or other discrepancies because each facility has developed its own methods of reporting. Other sources of data are referenced where appropriate. 6la GAMING OPERATIONS: FISCAL DATA Status of Tribal Gaming in Minnesota The status of Tribal gaming in Minnesota has been documented in a report to the legislature submitted by the offices of the Governor and Attorney General and the Tribal State Compact Negotiating Committee, dated September 5, 1991. The following is a summary of items related to Tribal gaming operations in Minnesota: * Indian Gaming Regulatory Act (IGRA) — Signed into law on October 17, 1988. The Act provides the regulatory framework for various forms of gambling on Tribal lands. A primary purpose of the Act is to provide a statutory foundation for Tribal gambling operations as a means of promoting economic development, self sufficiency and strong Tribal government. ¢ Video Games of Chance Compacts — between Octo- ber 20, 1989 and the spring of 1991, the State of Minnesota entered into video compacts with the eleven Tribal governments in the state. * Blackjack Compacts — between May and August of 1991, the State of Minnesota entered into blackjack = with the eleven Tribal governments in the tate. The actions of Congress and the State of Minnesota have established the regulatory framework for Tribal gaming. The Tribal governments have established gaming ordinances, built facilities and initiated operations pursuant to the evolv- ing regulatory framework. 62a 63a Gaming Operations- Fiscal data was obtained from repons furnished by the study paruc:- Expenditures pants. Expenditures were classificd by mayor expendiure typc. The following 1s a summary of cxpenditurcs by type in millions of dollars. Gaming Operations- Fiscal data was obtained from reports furnished by the study partici- Revenues pants. Revenues reported are net of payouts. The following is a summary of revenues by major source in millions of dollars . Revenue source 1992 1991 Expenditure type 1992 1991 Video $ 291.5 99.3 Payroli-related total $ 116.9 31.8 Blackjack 77.9 28.5 Operstions-related total 106.1 $7.2 Bingo and pull-tabs 12.8 11.0 Concessions & other 78 4.2 Total $ 223.0 89.0 TT TT AS TT LTT AT RR Total $ 390.0 143.0 Exhibit 2 illustratcs revenuc information by percent. Exhibit 3 illustrates expenditure information by percent. Exhibu 3 Exhibut 2 Expenditures by Type Revenues After Payouts by Source FY 91 FY ‘91 Operstions | Releted 47.6% Source: Fiscal repors of sudy parucrpants Source Fiscal reports of study parucipants The catcgory of operating expenditures includes various expenditures associaicd with the gaming opcratuons such as adverusing. uulucs, wain- ing. sccunty (if contracted), uniforms, supplics. maintenancc, in [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0546%3A18. Public record. Not legal advice.